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HomeMy WebLinkAbout2022-11-21 Council Work Session Agenda PacketCouncil Work Session Agenda November 21, 2022 – 5:30 pm 1. Call to Order / Roll Call 2. Rental Ordinance* 3. Unscheduled Items 4. Adjournment *Includes Materials - Materials relating to these agenda items can be found in the house agenda packet book located by the Council Chambers entrance, or online at the City’s website at www.corcoranmn.gov. HYBRID MEETING OPTION AVAILABLE The public is invited to attend the regular Council meetings at City Hall. Meeting Via Telephone/Other Electronic Means Call-in Instructions: +1 312 626 6799 US Enter Meeting ID: 827 9860 1705 Press *9 to speak during the Public Comment Sections in the meeting. Video Link and Instructions: https://us02web.zoom.us/j/82798601705 visit http://www.zoom.us and enter Meeting ID: 827 9860 1705 Participants can utilize the Raise Hand function to be recognized to speak during the Public Comment sections in the meeting. Participant video feeds will be muted. In-person comments will be received first, with the hybrid electronic means option following. For more information on options to provide public comment visit: www.corcoranmn.gov Page 1 of 7 8200 County Road 116  Corcoran, MN 55340 763-420-2288  www.corcoranmn.gov MEMO Meeting Date: November 21, 2022 To: City Council From: Natalie Davis McKeown, Planner Re: City Code Updates – Rental Dwelling Ordinance ____________________________________________________________________ Creation and adoption of a rental dwelling ordinance was identified as one of the Council’s “Top 4” priorities to address in the remainder of 2022. Earlier this summer, the Council expressed a desire to establish a rental dwelling ordinance with the following concerns in mind: 1. The phenomenon of corporate entities buying up large amounts of homes (particularly single-family homes, twin-homes, and townhomes) within a community to convert them into rental properties. The Council was concerned this pattern runs the risk of reducing homeownership opportunities for local residents while increasing housing costs. 2. The potential for new neighborhoods developed with homeownership in mind to be converted into primarily rental neighborhoods. Again, this concern seemed to be specific to neighborhoods with single-family homes, twin-homes, and townhomes. 3. The importance of an exemption for property owners renting to a family member. A first draft was shared with the Council at the September 22nd work session. The following key feedback was provided: 1. Apply a rental license limit to single-family rentals as well as twin-homes and townhomes. 2. Set the rental density limit within a neighborhood at 25% of the homes on a block. 3. In applying the rental license limit on the amount of licenses a single individual or entity can hold, the Council asked to remove a clause that would have allowed entities with a property management company to bypass the licensing limit. Page 2 of 7 4. The Council stated they felt a year to comply with the rental licensing requirements (including property maintenance) was fair with a carve out for life saving measures. 5. The Council asked staff to spend one hour on researching ordinances for short- term rentals (for AirB&B and the like) to see if it was a simple paragraph that could be added into the draft. Below is a summary of the work completed since the September 22nd work session. I. Second Draft of Rental Dwelling Licensing Ordinance A second draft of the Rental Dwelling Licensing Ordinance is enclosed for your review. Several changes were made based on the feedback provided by the City Attorney as well as the City Council. The following is a summary of the key changes: 1. Removal of “Family” definition. The definition of family in the first draft was based on a definition used by HUD and is relied upon in cities that set occupancy restrictions on rental properties. This was not expressed as a goal or desire by the Council, and the definition caused confusion in how the licensing exemption for renting to a “family” member would be applied. The term was not relied upon anywhere in the first draft; therefore, it was unnecessary and removed from the second draft. 2. Applicability of rental license limit Chapter 118.03, Subd A (2) includes a license limit so that no property owner is permitted to license more than three rental dwellings in the City. This only applied to single-family homes in the first draft, but the second draft clarifies that this also applies to twin-homes and townhomes unless an exemption is granted. Additionally, the first draft included an exemption to this rule if the property owner hired a property management company. This exemption was removed per the direction of the Council. The City Attorney is comfortable with removing this exemption and relying upon the special exemption process outlined in the second draft. 3. Expected compliance timeline Paragraph 4 was added to Chapter 118.03, Subd. A that outlines the expected compliance timeline for property owners. Property owners of rental dwellings are expected to apply for a rental license within 6 months of the enactment of this ordinance. Additionally, they will be given 1 year to bring their property into complaince with the Property Maintenance Code (discussed later in this report) after the initial licensing inspection identifies any violations. The 1-year clock will start based on the date of the notice sent to the property owner notifying them of any Page 3 of 7 violations confirmed at the initial license inspection. However, when the Code Compliance Official determines there are life threatening violations on the property (such as inoperable smoke alarms), property owners will be required to address such violations within 30 days of being noticed. 4. License exemption The first draft included an exemption for property owners renting to an immediate family member. The original process required the property owner to submit an affidavit. Staff raised concerns with the ability to fairly apply the exemption while enforcing the licensing requirements. Since the September 22nd work session, staff confirmed other cities rely on the relative homestead process which requires registration with Hennepin County. Staff believes this will be a much easier way for the City to confirm the exemption and enforce the licensing requirements overall. Therefore, the license exemption in Chapter 118.03, Subd. B (1) has been changed to remove the affidavit process and rely on the property being registered as a relative homestead with Hennepin County. 5. Information required for application In Chapter 118.03, Subd. C (2), the City Attorney added clear requirements for the designation of a property manager that were not included the first draft to City Council. 6. Rental density limit The Council identified 25% as a reasonable rental density within a given block. Chapter 118.03, Subd. I (1) and subsequent table reflects this updated density limit. 7. 118.05: Maintenance Standards The maintenance standards used for inspections were updated to reflect Corcoran’s adoption of a Property Maintenance Code (discussed later in this report). The original draft discussed license hearings in paragraph B of this section. The City Attorney’s edits removed this paragraph and added an entire section later in the ordinance that addresses conduct on licensed premises as well as the enforcement and administration of conduct violations. This is seen in Chapter 118.07 of the second draft and is entitled “Licensee Responsible for Conduct of Occupants or Guests.” The inspections portion of the draft was primarily taken from Red Wing since the inspections threshold has been upheld by the courts. However, the City Attorney simplified and clarified verbiage in paragraphs 11, 12, and 13 related to inspections and the authorized conduct of the inspector. Additionally, the attorney recommended removing paragraphs 14, 15, 16, and 17 (having to deal with recordkeeping and Page 4 of 7 sharing of data) from the first draft as he believed the language was either unnecessary or invalid since some data will be considered public information and subject to a data request regardless of the type of agency requesting the information. 8. 118.06: Compliance Orders The City Attorney added a section that outlines the process for notifying licensees and property owners of violations with the City’s Maintenance Codes. 9. 118.07: Licensee Responsible for Conduct or Occupants or Guests As discussed previously, the City Attorney added a section that details he enforcement and administration of crimes that occur with rental properties. Previous discussions with Public Safety explained their desire for a “strike” system similar to what is in place with Moorhead and references crimes within MN State Statutes. This feedback has been incorporated into the second draft including a clear carve out for tenants that call the police for emergency assistance. 10. 118.08: License Denial, Suspension, or Revocation, Violations Changes include the addition of a violation schedule and a clause to allow unpaid administrative penalties to be assessed to the property. 11. 118.12: Severability and Savings Clause Staff added a severability and savings clause to ensure that the ordinance remains valid even if a certain provision is ever determined to be invalid. II. First Draft of Property Maintenance Code As was discussed with the first draft, the City will need to establish a property maintenance code in order to have a proper basis for rental license inspections. Many cities refer to the International Property Maintenance Code with amendments to some of the provisions. Staff worked with the Construction Services Division to go through each of the provisions of the International Property Maintenance Code and determined where changes were needed and which provisions were not needed either to existing provisions in City Code or the provisions were overly prescriptive. The property maintenance code would be added as Chapter 87 under Title VIII: General Regulations within the City Code. The Property Maintenance Code would apply to all properties throughout the City, but the threshold for inspection is different for owner-occupied properties. Rental properties are subject to inspections under the terms of the licenses. Per the City Attorney, the threshold to inspect an owner-occupied property under the property maintenance code would require one of the following to be true: Page 5 of 7 1. Enough evidence of a violation that a judge would be willing to grant an administrative warrant for an inspection. 2. The violation is in clear view of an enforcement official (e.g., police officer, code enforcement officer, rental inspector, building inspector, etc.) from the public right-of-way or a property where the official was granted permission to enter. The first draft of the property maintenance is enclosed. The 2021 International Property Maintenance Code can be accessed at the following website for further context: https://codes.iccsafe.org/content/IPMC2021P1/preface III. Short-Term Rental Research Staff spent roughly 1 hour on researching short-term rental licensing as directed. Staff does not believe it is as simple as adding a paragraph. Examples of short-term rental ordinances were at least 3 pages long (a couple of examples are enclosed). A policy guide was found that could be very helpful in directing the discussion and outlining the City’s goals should the Council decide they want to move forward with licensing short- term rentals now or in the future. IV. Fee Schedule Research Staff pulled the fee schedules for a few Hennepin County cities with rental ordinances to get an idea of where our fees should be established. The most applicable seemed to be Dayton, Brooklyn Park, and Maple Grove. A summary of their fees is below. City License Fee Re-Inspection Fee Conversion Fee For Previously Owner- Occupied Units Dayton (Annual) $75/unit $75 None provided Brooklyn Park (Annual) $150/single rental unit $200 plus $15/unit for apartments $100 $750 Maple Grove (Ever 3 years) $225 single rental units $150/building plus $15/unit for apartments $60 $100 Additionally, Maple Grove had the following fees outlined that the City Council may want to consider: Page 6 of 7 Penalty Type Fee Penalty for renewal applications filed and fees paid after December 1st (renewal date) $25 for each 30 days after December 1, but no more than 60 days Filing fee for appeal of compliance order $50 Reinstatement fee $50 Minneapolis’s fees were also pulled, but they have a tiering structure that staff does not recommend implementing at this point. If the Council is interested in looking into this further, the Minneapolis fee schedule and tiering can be accessed at the following link: https://www2.minneapolismn.gov/business-services/licenses-permits-inspections/rental- licenses/fees/. Based on Maple Grove, Brooklyn Park, and Dayton’s fees, staff recommends the following annual fees: Dwelling Type License Fee Re-inspection Fee Conversion Fee Single-family homes, twin-homes, and townhomes $100 per unit $75 per unit $100 Apartments $200 per building plus $15 per unit $75 per unit Not Applicable Additionally, staff recommends a similar late fee, reinstatement fee, and appeal filing fee as what is established in Maple Grove. V. Next Steps 1. Density Map A density map needs to be created for proper tracking of rental licenses. Planning staff was provided access to GIS to create a map on 11/9/22 through an existing license held by Public Works. A draft map should be available in January. 2. Short-Term Rentals The Council needs to decide if they want to take the time to address short-term rentals now or add this as a future priority, potentially in 2023. 3. Further refining and review of drafts Page 7 of 7 The City Attorney will be asked to review everything once more after any further changes are made based on Council feedback at this meeting. Does the Council want additional drafts brought back for review (this would be recommended if the Council decides to address short-term rentals now)? If so, an additional work session should be scheduled. If the Council’s feedback would result in minor changes needed to the provided drafts, is the Council ready to move forward with adoption of the Rental Dwelling Licensing Ordinance as well as the Property Maintenance Code? If so, a timeline should be established for when the final drafts will be brought back to Council for adoption. 4. Licensing Software If the Council is ready to move forward with adoption, staff will work to put a licensing program in place. Staff believes this can be done within our current software system (BS&A) that we use for building permits, but we will likely need to work with our vendor to set up the process. Attachments 1. Second Draft of Rental Dwelling Licensing Ordinance 2. First Draft of Property Maintenance Code 3. Examples of Short-Term Rental Ordinances 4. Short-Term Rental Policy Guide from the National League of Cities Page 1 of 15 CHAPTER 118: RENTAL DWELLING LICENSING 118.01: PURPOSE. It is the purpose of this chapter to protect the public health, safety, and welfare of residents of Corcoran who live in rental units by adopting a rental dwelling inspection and maintenance program that corrects substandard conditions and maintain a standard for existing and newly constructed rental dwellings in the City. The operation of rental properties is a business enterprise that includes certain responsibilities. Rental owners, operators, and managers are responsible to take such reasonable steps as are necessary to ensure that the citizens who occupy such rental units, as well as neighboring properties, may pursue the quiet enjoyment of the normal activities of life in surroundings that are safe, secure, and sanitary, free from noise, nuisances, and annoyances, and free from unreasonable fears about safety of persons or property. 118.02: DEFINITIONS. Words used in this chapter shall have the following meanings: ALTERNATIVE INSPECTION REPORT. A rental dwelling inspection report that the applicant obtains from a building inspector for the purposes of receiving United States Department of Housing and Urban Development (“HUD”) rental approval. APARTMENT. A community, complex, or building having a common owner and containing at least one rental dwelling unit. BLOCK. An area of land enclosed within the perimeter of streets, watercourses, public parks, municipally owned lots, and city boundaries. CITY INSPECTOR’S REPORT or INSPECTION REPORT. A rental dwelling inspection report prepared and signed by a city inspector. CITY ADMINISTRATOR. The City of Corcoran City Administrator or his/her designee. COMPLEX. The total number of buildings on the license application or contiguous rental properties under the same ownership. DWELLING. A building or one or more portions of a building occupied or intended to be occupied for residential purposes. LET FOR OCCUPANCY or to LET or to RENT. To permit possession or occupancy of a dwelling or rental dwelling unit whether or not compensation is paid by a person who is not the legal owner of record thereof, pursuant to a written or unwritten lease. MULTIPLE RESIDENTIAL BUILDING. A building with any dwelling joined to another dwelling at one or more sides by a party wall or walls, including apartments, townhomes, twin- homes, duplexes, or quad-homes. OCCUPANT. Any person living or sleeping in a dwelling unit, or having possession of a space within a dwelling unit. Page 2 of 15 OPERATOR or MANAGER. Any person identified by Owner who has charge, care, or control of a structure or premises, and the maintenance and upkeep thereof, that is let or offered for occupancy and who is designated and empowered to receive service of notice of violations of this chapter on behalf of Owner. OWNER or LICENSEE. Any person, agent, operator, firm, corporation, or other legal entity having a legal or equitable interest in the property or recorded in the official state, county, or city records as holding title to the property or otherwise having control of the property. PERSON. May be an individual, corporation, firm, association, company, partnership, organization, or any other group acting as a unit. PROPERTIES, PROPERTY OR LOTS. Lots of record. REINSPECTION. A follow-up inspection that is: 1. Conducted to determine of a code violation has been corrected; 2. Necessary because a licensee, owner, or other responsible party fails to attend a scheduled inspection; 3. Necessary because a scheduled inspection does not occur or is prevented from occurring due to an act of a property owner or agent; or 4. Any inspection following an initial inspection. RENTAL DWELLING. Any dwelling used for residential occupancy by one or more persons who are not the owner or a member of the owner’s immediate family. RENTAL DWELLING UNIT (RDU). Any room or rooms, or space, in any rental dwelling designed or used for residential occupancy by one or more persons who are not the owner or a member of the owner’s family. 118.03: LICENSE REQUIRED A. Rental Dwelling License. 1. No person, partnership, business entity, or corporation shall operate, let, or cause to be let, a rental dwelling or RDU without a license for each building. 2. No property owner shall be permitted to license more than three rental dwellings that qualify as a single-family residence, a twin-home, and/or townhome, unless the property owner: a. Is a public housing agency; or b. Obtains a special exception from the City Council. i. Property owners seeking a special exemption shall file a written request for such consideration with the City Clerk, in a form specified by the City. The request shall set forth the reasons for requesting the special exemption and the means by which the requester will ensure Page 3 of 15 individual property oversight and maintenance of code compliance on all owned rental dwellings within the City. ii. In order to be eligible for a special exemption, the City Council must find that the requester has demonstrated a capacity and presented a plan which suggest that it is probable that the requester will maintain compliance with the City Code on all rental dwellings within the City. iii. The Council’s decision to permit a requester to exceed this cap may include reasonable and related conditions and is subject to revocation at any time, due to non-compliance with those conditions or the City Code. Any special exemption granted shall not be a permanent entitlement of the requester, and application for such exemption must be renewed during each licensing cycle. No requester shall be entitled to a presumption of renewal of the exemption. This special exemption shall apply only to the provisions of this section 118.03 A(2) and all rental dwellings shall comply with all provisions of this chapter. Principal owners or controllers of legal entities which own one or more rental dwellings shall be subject to this cap as individual principal owners or controllers. For illustration, but not limitation, no person or entity may circumvent this restriction by maintaining ownership interests in multiple separate owner entities and each such ownership interest shall be counted toward the cap set forth herein. 3. A rental dwelling license shall be valid for a 1-year cycle beginning on April 1 each year. A current licensee who intends to continue letting a rental dwelling shall apply for a license renewal at least thirty (30) days before the end of the then-current licensing term. 4. A residential rental property owner owning residential rental property at the time of the adoption of this chapter shall have 180 days to comply with the licensing requires of this chapter. Rental property owners shall have 365 days to comply with the provisions of Chapter 87 (Property Maintenance Code) based on the dated notice identifying any violations confirmed at the initial license inspection. However, if the Code Compliance Official determines there is a life-threatening violation of the Property Maintenance Code (e.g., inoperable smoke alarms), the property owner and/or licensee shall address such violations within 30 days of the dated notice identifying such a violation. B. License Exemption 1. The owner of a rental dwelling or RDU is exempt from the licensing requirements of this section if the property qualifies and is registered with Hennepin County as a relative homestead. Page 4 of 15 2. The owner must notify the City in writing within 30 days of this exemption being lost because the occupant is not related to the owner as one of the above-referenced relations. 3. This chapter does not apply to hotels, motels, hospitals, state-licensed residential care facilities, assisted living facilities, nursing homes, and high school dormitories. 4. This chapter does not apply to single-family homes in which the owner resides within a portion of the building. In instances of single-family buildings with more than one unit including accessory dwelling units, townhomes, and twin-homes, only the portion of the building in which the owner resides is exempt. 5. This chapter does not apply in instances where an Interim Use Permit has been approved for an accessory dwelling unit in conjunction with a single-family home if the owner occupies the single-family home or the accessory dwelling unit. . C. Applications. An application for license shall be made on a form provided by the City. The license application shall contain the following information: 1. Property Owner Information. a. The name, address, phone number, and complete information of the property owner if the owner is an individual. b. The name, address, phone number, and complete information of the at least one principal officer, manager or director, if the property owner is a business entity. i. Business entities seeking a license shall provide a list of all principal owners, officers, managers, and directors of the entity. 2. Designation of Property Manager, Contact Information. For all rental dwelling licenses, the license applicant must designate and provide a physical business hours address and 24-hour contact information for the Manager of the rental dwelling, as defined in this chapter. The Manager may be the owner of the rental dwelling or another person who has been provided authority and assigned the duty to exercise control over the rental dwelling and ensure compliance with the City Code. For all rental dwellings which are not single-family rental dwellings, the applicant must also identify and provide a physical business hours address and 24-hour contact information for a second Manager for such rental dwellings. All rental dwelling Managers must reside in the Twin Cities seven county metropolitan area. The Owner of a rental dwelling must notify the City, in writing, immediately upon any change of Manager. Owner agrees that his/her Manager of record with the City shall be Page 5 of 15 authorized to accept all notices, including formal service of documents, on behalf of the Licensee. 3. Number and Type of rental dwellings. The number of units and types of units (condominium, apartment, townhome, twin-home, single-family home, and the like) within the rental dwelling. 4. Principal Tenants. The name, telephone numbers, and addresses of principal tenants, if any, are required. D. Changes. 1. The Code Compliance Official must be notified in writing of any changes to the name(s) and contact information provided on the application. 2. A license is non-transferable. If there is a change in the ownership of the rental dwelling, a new license is required. 3. If changes are made in the number or type of units, the owner shall apply to amend its license. E. Fees. 1. The application fee shall be determined by the City Council from time to time and made a part of the City’s fee schedule. The application fee shall be paid at the time of application. 2. Renewal license fees, as set forth within the City’s fee schedule, shall be due at the time of renewal and prior to the license expiration date. 3. In the cases of new, unlicensed dwellings, license fees shall be due upon issuance of the certificate of occupancy. 4. In the case of initial licensing, license fees shall be due prior to issuance of the respective license and are due within 30 days of the date of the invoice. 5. In the case of a licensing period of less than one (1) year, license fees may be prorated as set forth by City Council action, and in the City Council’s sole discretion. 6. The license fee shall include the initial inspection and one (1) follow-up inspection. A fee, established by the City Council, shall be charged for any reinspection or attempted reinspection required, whether due to the failure of the reinspection, the Page 6 of 15 Rental Housing Inspector’s inability to gain access to the dwelling at the time of attempted reinspection, or otherwise, and must be paid before a license will be issued. 7. An owner of a rental dwelling or RDU who fails to obtain an operating license or approval of an affidavit certifying an applicable exemption, will be subject to an administrative service charge set by the City Council, in addition to any other penalties contemplated within this chapter. 8. A license fee paid later than ten working days after the prescribed date is subject to an additional administrative service charge set by the City Council. 9. Once issued, a license is nontransferable and the license is not entitled to a refund of any license fee upon revocation or suspension, or transfer of ownership. F. Tenant Register. As a condition of the license, the applicant must, as a continuing obligation, maintain a current register of tenants and other persons who have a lawful right to occupancy of a rental dwelling. In its application, the applicant must designate the name of the person or persons who will have possession of the register and must promptly notify the Code Compliance Official of any change in the identity, address, or telephone numbers of such person. The register must be available for inspection by city officials at all times. G. Notification Requirements for Public Hearings. The licensee must, as a continuing obligation of the license, provide written notice to tenants or in the alternative, post the written notice in the lobby or common area of the rental dwelling for any public hearing received by the owner that pertains to the rental dwelling or any adjacent right-of-way. H. Display of License Certificate. The license certificate must be exhibited in a conspicuous place at or near the entrance to the rental dwelling. For buildings containing more than three RDUs, the certificate must be displayed in the rental office or other common area accessible to all tenants of the licensed building. I. Rental Density for Single-Family, Townhome, and Twin-Home Rental Dwellings. 1. In a low-density residential zoning district (5 units or less per acre), no more than 25% of the lots on any block shall be eligible to obtain a rental license and the number of rental licenses shall be capped as set forth in the table below, unless a temporary license is granted by the City Council as provided herein. Table 1 indicates how many lots per block are able to be licensed as a rental property based on the lots that exist on the block. Table 1 Page 7 of 15 Lots/Block RDUs Allowed 1-14 3 15-24 6 25-34 8 35-44 11 45-54 13 55-64 16 65-74 18 75-84 21 85-94 23 2. The following guidelines shall apply to determine eligible blocks and lots. a. If a block contains more than one type of zoning district, only the lots within the low-density residential zoning district shall be included in the calculation of the total number of lots per block. b. Commercial or industrial uses located within or adjacent to a low-density residential zoning district shall not be included in the calculation of the total number of lots per block. c. If the number of rental dwellings meets or exceeds the permitted number of rental dwellings per defined block on or after the effective date of this chapter, no additional rental licenses shall be approved for the block, unless a temporary license is granted by the City Council as provided herein. Bona fide existing rental licenses may be renewed, however, should a rental license not be renewed, or if the rental license is revoked or lapses, the rental license shall not be reinstated unless it is in conformance with this subchapter and other applicable sections of the City Code. d. If the number of rental properties meets or exceeds the permitted number of rental properties per defined block on the effective date of this chapter, a property owner may request a temporary license to allow an additional rental property for that block. The Council may grant or deny a temporary license in its sole discretion. Persons requiring a temporary license must make an annual application to the City Council. J. Tenant background checks and lease agreements. Upon request, the applicant must provide a copy of third party or comparable background checks for tenants and a copy of the lease. Page 8 of 15 K. Contracts for deed. A property sold pursuant to a contract for deed must be recorded against the property or the property will be deemed a rental property and a license will be required. L. Investigations. 1. For all new applications, a background investigation will be conducted on the property owner listed on the application. The City may request additional information from the license applicant regarding all property owners, if the property is owned by individuals or regarding all officers, managers or directors, if the property is owned by a business entity, and may conduct additional background investigations as it deems necessary. The application shall pay a background investigation fee for each background investigation conducted. 2. For renewal applications, background investigations are not required and no background investigation fee shall be required; however, the City may conduct a background investigation, at its sole discretion, at the City’s cost. The results of a discretionary background check may be used to enforce the provisions of this Chapter the same as the results of mandatory background checks. 118.04: RESPONSIBILITY FOR ACTS OF MANAGER Licensees are responsible for the acts or omissions of their Manager(s) as it pertains to the rental dwelling and compliance with this chapter and City Code. 118.05: MAINTENANCE STANDARDS A. It is the responsibility of the licensee to assure that every rental dwelling and RDU is maintained in compliance with all applicable city ordinances and state and federal laws including, but not limited to: 1. MN State Building Code 2. The Corcoran Property Maintenance Code 3. MN State Fire Code 4. Corcoran City Code (Collectively the “Maintenance Codes”) B. Inspections. No operating license may be issued or renewed unless the City determines, following an inspection conducted pursuant to this section, that the rental dwelling and its premises conform to the Maintenance Codes. As more specifically provided below, the Code Compliance Official and their designees may cause inspections, follow-up inspections, and re-inspections on rental dwellings or RDUs on all classes of property within the City on a scheduled basis, and on rental dwellings, RDUs, owner-occupied Page 9 of 15 residential units on all classes of property when reason exists to believe that a violation of an applicable portion of the Maintenance Codes exists, has been, or is being committed. 1. The Code Compliance Official and their designees are authorized to contact owners, tenants, and managers of rental dwellings to schedule inspections of rental dwellings at reasonable times. They are also authorized to conduct those inspections once scheduled. These scheduled inspections will be conducted to determine whether the rental dwelling and its premises conform to the Maintenance Codes so as to inform the City’s decision of whether to issue an operating license. The authority to schedule and to conduct these inspections is available even if the owner or owner’s agent holds a temporary or provisional license, and without regard to whether the owner or owner’s agent has filed an application for an operating license. 2. Upon receipt of a properly executed application for an operating license, the Code Compliance Official shall cause an inspection to be made of the premises to determine whether the structure is in compliance with the Maintenance Codes. Inspections performed pursuant to the authority in paragraph 1 and paragraph 2 of this subsection are hereinafter described as “Licensing Inspections.” 3. The Code Compliance Official and their designees are authorized to conduct inspections on rental dwellings, RDUs, or owner-occupied residential units on all classes of property when reason exists to believe that a violation of an applicable portion of the Maintenance Codes exists, has been, or is being committed. A complaint or complaints from a tenant of a rental dwelling shall be an adequate basis for a reinspection of a rental dwelling. 4. To increase the awareness by owners of the likely timing of requested inspections and to conserve public resources, the Code Compliance Official may schedule and conduct inspections pursuant to paragraph 1 according to the area of the City in which the unit is located, dividing the City into zones and endeavoring to perform inspections pursuant to paragraph 1 in one zone before beginning them in a different zone. 5. If a structure or rental dwelling is not in compliance, one or more follow-up inspections or re-inspections may be conducted to verify that conditions and any corrections conform to the provisions to the Maintenance Codes. 6. When the basis for the inspection pursuant to this section is information observed or obtained during a Licensing Inspection, such reinspection or follow-up inspections shall be conducted on a scheduled basis, whenever possible. 7. When scheduling Licensing Inspections pursuant to this chapter, the Code Compliance Official or their designee will seek the consent of the owner of the Page 10 of 15 property (if not already received) to inspect those areas outside of the RDUs that are not accessible to the general public (including any internal rooms that are inaccessible to the public, such as storage or mechanical rooms) and to unrented dwelling units, and the consent of the primary tenant of the RDU (if not already received) to inspect the Unit. If the property owner demonstrates to the satisfaction of the Code Compliance Official or their designee that one more tenants have consented in writing to the inspection of their units, individual contact by the City with those tenants may be deemed unnecessary. a. For the purposes of satisfying paragraph 7, owners of RDUs shall report to the City the full names, telephone numbers, and addresses of the principal tenant of all RDUs under their ownership or control, and update such information as needed to ensure that it is accurate and current. Licensees are responsible for the accuracy and completeness of this information and the City shall be permitted to rely on the same when determining appropriate notice. 8. If the City is unsuccessful in securing consent for an inspection pursuant to this chapter, the City may seek permission, from a judicial officer through an administrative warrant, for its Code Compliance Official, Building Official, Fire Marshal and their applicable designees to conduct an inspection. Nothing in this Code shall limit or constrain the authority of the judicial officer to condition or limit the scope of the administrative warrant. 9. The scope of a Licensing Inspection shall be limited to what is necessary to determine in accordance with this chapter whether the rental dwelling or applicable RDU and its premises conform to the Maintenance Codes. This shall not preclude the applicable inspector from relying upon observations made during a Licensing Inspection in seeking one or more of the remedies provided in this chapter. 10. A Licensing inspection must be scheduled during ordinary business hours or as otherwise arranged with the owner or tenant. Owners and their agents and tenants may at their option request that Licensing Inspections above take place only when they are present, so long as the request identifies a reasonable, feasible and expedient time(s) for such inspection following the date of the request when the requesting party agrees to be present. 11. Inspectors are not authorized to open containers, drawers, or medicine cabinets, unless the containers, drawer, or medicine cabinets are opened with the consent of the tenant (for areas inside the RDU) or the Owner (for areas inside the building but outside a tenant’s unit, and areas inside an unoccupied unit). For purposes of this paragraph, a medicine cabinet is a covered cabinet located above a sink in a dwelling unit’s bathroom. Page 11 of 15 12. Inspectors are authorized to open cabinets (other than medicine cabinets) or closets only when because of their location, those closets or cabinets, when unopened, appear to contain one or more water or waste water pipes, or fuses, or exposed electrical wiring, and it is reasonably necessary in order to inspect for the existence of one or more conditions that violations the Maintenance Codes, or when the cabinets or closets are opened with the consent of the tenant (for areas inside the unit) or the Owner (for areas inside the building but outside a tenant’s unit, and areas inside an unoccupied unit). C. Inspection Not Required. Inspection for the issuance or renewal of a license may be waived by the City, in its sole discretion, if the owner of a dwelling unit proves that within the previous 12 months the dwelling unit passed an inspection required by the City, State, or Federal regulations that is at least as stringent as the inspection required under this chapter and the City is not aware of any evidence of violations occurring or present subsequent to that alternative inspection. The City has sole discretion to determine when an inspection program is at least as stringent as the inspection required under this chapter. Inspections conducted as the result of a complaint made to the City may not be waived under this provision. 118.06: COMPLIANCE ORDERS A. Upon the identification of a violation of the Maintenance Codes, the City shall provide written notice of the violation to the Owner or Manager. Notice may be personally served on or otherwise directly provided to the Owner or Manager or delivered by U.S. mail to the Owner or Manager at the address on record with the City in the license. The notice shall articulate the violation and the time by which the violation must be corrected. B. Should the Licensee fail to correct the noticed violation within the time provided, the City may pursue any or multiple remedies contemplated in this chapter. C. The notice provisions herein shall not apply to, and nothing in this section shall prohibit the City from taking immediate action to address an emergency as contemplated in Section 118.09. 118.07: LICENSEE RESPONSIBLE FOR CONDUCT OF OCCUPANTS OR GUESTS A. Conduct on the licensed premises. It shall be the responsibility of the licensee to take appropriate action following conduct by occupant(s) or guest(s) of the occupant(s) which is in violation of any of the following statutes or ordinances: 1. Minn. Stat. § 609.72 relating to disorderly conduct. 2. Minn. Stat. § 609.74 and Subd. 5 of Chapter 82 of the City Code related to public nuisances and noise nuisances. 3. Minn. Stat. § 340A.701-340A.703 relating to the sale of intoxicating liquor. 4. Minn. Stat. § 609.321, Subd. 9 relating to prostitution or acts related to prostitution. Page 12 of 15 5. Minn. Stat. § 609.221 et seq. relating to assaults, including domestic assaults as defined in Minn. Stat. § 609.224. 6. Minn. Stat. § 609.595 relating to criminal damage to property. 7. Minn. Stat. § 609.713 relating to terroristic threats. B. Enforcement and Administration 1. The Director of Public Safety or his/her designee shall be responsible for enforcement and administration of this section. 2. Upon a determination by the Director of Public Safety or his/her designee (the “Director”) that a licensed rental dwelling was involved in a violation of paragraph A above, the Director shall notify the licensee by U.S. mail of the violation and direct the licensee to take steps to prevent further violations. A copy of the notice shall also be sent to a tenant in violation of paragraph A. 3. Upon a second violation of the provisions of paragraph A within 12 months involving the same tenant or occupant or a guest of the same tenant or occupant, notice of the violation shall be provided as set forth in paragraph B2 above, and shall require the licensee to submit a written report of action taken to prevent further violations on the licensed premises. The written report shall be submitted to the Director within 10 business days of the request for the same and shall detail all actions taken by the licensee in response to all notices regarding violations to paragraph A occurring within the preceding 12 months. If the licensee fails to comply with the requirements of this paragraph, the City Council may take action on the license, after providing an opportunity for a hearing to contest the allegations of non-compliance with this paragraph. 4. If a third or subsequent violation of paragraph A, involving the same tenant or occupant or a guest of the same tenant or occupant, occurs within 12 months of any two previous properly noticed violations pursuant to paragraph A, the City Council may take action to deny, revoke, suspend, or not renew the license. Such action may be initiated by the City Council at the request of the Director in a manner set forth in this chapter. 5. Calls for assistance shall not count as a violation of paragraph A including, but not limited to, tenants calling the police for assistance with a gathering of people that has become a nuisance at a rental dwelling or RDU and instances of domestic assault. 6. The City Council may stay or terminate any adverse licensing action if the triggering violation occurred during the pendency of an eviction proceeding to remove the offending tenant or occupant, and that proceeding is being diligently pursued by the licensee. 6. A determination that the licensed premises has been used in violation of paragraph A shall be made upon substantial evidence to support such determination. It shall not be necessary that criminal charges be filed or proven to support such a determination. Page 13 of 15 Further, imposition of other enforcement actions, penalties, administrative offense tickets, criminal charges, or other actions on the license shall not act as a bar to any other action on the license pursuant to this chapter. C. Appeal 1. Upon notice of a violation of paragraph A, or upon a notice of a failure to comply with paragraph B3, the licensee or tenant in violation may file a written appeal of such asserted violation with the City Clerk, within 10 days of the notice, after which any appeal shall be deemed to have been waived. Upon receipt of notice of such appeal, the City shall schedule and notice a hearing before the City Council to hear evidence to determine if substantial evidence exists to support such asserted violation. 2. Upon rendering a decision, the City Council shall provide notice to the appellant of the Council’s decision. Should the Council uphold the appeal, the violation shall be removed from the property file and shall not be considered when determining the number of license violations at the rental dwelling. 118.08: LICENSE DENIAL, SUSPENSION, OR REVOCATION, VIOLATIONS A. Violations. A violation of this chapter is a misdemeanor. Each day a person fails to comply with a compliance order or other provision of this chapter shall constitute a separate offense. In addition to enforcement of criminal remedies, the City may issue administrative offense tickets, and/or take action on a license, or pursue any other remedy at law or in equity available to the City. The City’s remedies shall be cumulative and may be pursued against multiple parties. The City’s election to pursue any one remedy set forth herein shall not act as a bar to any other remedial action. B. Penalty Schedule. The table below outlines the penalty schedule for violations of this chapter: Violation Fine First violation $100 Second violation within 24-months $250 Third violation within 24-monts and subsequent violations $500 C. Assessment of unpaid administrative penalties. Any unpaid administrative penalty for failure to comply with the rental licensing provisions in this Chapter may be assessed against the property in the manner set forth in City Code. D. Grounds for denial, suspension, or revocation. The City Council may deny, revoke, or suspend a license pursuant to this Section. During a suspension, the property for which the suspension occurred shall be included for purposes of calculating the number of eligible lots per block, unless found to be otherwise ineligible. Page 14 of 15 1. A license issued pursuant to this chapter may be denied, revoked, or suspended upon a finding of noncompliance with the provisions of this chapter. Further, non- disclosure, misrepresentation or misstatement of material fact in any application for a license shall be a prima facie showing of cause for revocation, suspension, or other such action restricting the privileges of a licensee, as determined by the City Council. Reinstatement of a suspended or revoked license shall be accompanied by a fee in an amount set by the City Council. Issuance of a new license after suspension or revocation shall be made in the manner provided for obtaining an initial license. Any Owner or principal of an Owner entity who has an interest in two or more licenses revoked pursuant to this chapter shall be ineligible to hold or have an interest in a license for a period of at least five years. 2. The City Council may, for cause, deny, revoke, or suspend a license or take other action restricting the privileges of a license subject to the following requirements: a. The City shall provide written notice to the licensee containing a statement of reasons or causes for the proposed action together with a notice of a hearing. b. The City Council shall conduct a hearing on the proposed action and hear relevant evidence the applicable City representatives and from the licensee or affected tenant, if any is offered. The City Council shall consider such evidence and provide findings of fact together with a statement of action taken, along with any applicable conditions of any such action or other action restricting the privileges of the licensee. c. The City shall forward the findings and statement of action taken to the licensee by mailing the same to the address of record in the license. E. Notification of tenants. Upon suspension, revocation, or denial of a license, or if the RDU is not licensed, the City will make reasonable efforts to notify all affected tenants. 118.09: SUMMARY ACTION A. Emergency. When the conduct of any owner or owner’s agent, representative, employee or lessee, or the condition of the rental dwelling or RDU, or the property in or on which it is located, is detrimental to the public health, sanitation, safety and general welfare of the community, or residents of the rental dwelling or RDU so as to constitute a nuisance, fire hazard, or other unsafe or dangerous condition and thus give rise to an emergency, the Code Compliance Official or Building Official has the authority to summarily and immediately condemn or close rental dwellings or individual RDUs or areas of the rental dwelling as the Code Compliance Official or Building Official deem necessary. Page 15 of 15 B. Notice. Notice of summary action will be posted at the units or areas affected and will describe the units or areas affected. No person shall remove the posted notice, other than the Code Compliance Official or Building Official or their designee. C. Appeal. Any personal aggrieved by a decision or action of the Code Compliance Official or their designee to condemn all or part of a rental dwelling shall be entitled to appeal to the Council by filing a notice of appeal with the City Administrator, within 10 days. The Administrator must schedule a date for hearing before the Council and notify the appellant of the date. 118.10: POSTED TO PREVENT OCCUPANY. Whenever any rental dwelling or RDU is found to be unfit for human habitation, it shall be posted by the Code Compliance Official or their designee on the door of the rental dwelling or RDU, whichever the case may be, to prevent further occupancy. No person, other than the Code Compliance Official or their designee, shall remove or alter any posting. The Code Compliance Office or their designee will post the date the rental dwelling or RDU shall be vacated, and no person shall reside in, occupy, or cause to be occupied that rental dwelling or RDU until the Code Compliance Official or Council permits it. 118.11: NO WARRANTY BY CITY By enacting and undertaking to enforce this chapter, neither the City, nor its Council, agents, or employees warrant or guaranty the safety, fitness or suitability of any rental dwelling or RDU in the City. Owners and occupants should take appropriate steps to protect their interests, health, safety, and welfare. 118.12: SEVERABILITY AND SAVINGS CLAUSE If any section or portion of this chapter shall be found unconstitutional or otherwise invalid or unenforceable by a court of competent jurisdiction, that finding shall not service as an invalidation or effect the validity and enforceability of any other section or provision of this Code. Page 1 of 10 CHAPTER 87: PROPERTY MAINTENANCE CODE 87.01: ADOPTION OF THE INTERNATIONAL PROPERTY MAINTENACE CODE The 2021 International Property Maintenance Code (IPMC), as promulgated by the International Code Council, Inc., is adopted by reference and incorporated in the City Code in whole as if it was set out in full, subject to the amendments contained in this Chapter. 87.02: AMENDMENTS TO INTERNATIONAL PROPERTY MAINTENACE CODE A. Section 101.1 Title. These regulations shall be known as the Property Maintenance Code of the City of Corcoran, hereinafter referred to as “this code.” B. Section 102.1 General Applicability. Where there is a conflict between a general requirement and a specific requirement, the specific requirements shall govern. Where differences occur between provisions of this Code and the referenced standards, the provisions of this code shall apply. Where there are conflicts with this code and other provisions of the City Code, the City Code provisions will prevail. Where, in a specific case, different sections of this code specify different requirements, the most restrictive shall govern. C. Section 102.3 Application of Other Codes. Repairs, additions or alterations to a structure, or changes of occupancy, shall be done in accordance with the procedures and provisions of the Minnesota State Building Code (MSBC), established pursuant to Minnesota Statutes 16B.59 – 16B.75, as amended from time to time, and as adopted by the City. Nothing in this Code shall be construed to cancel, modify, or set aside any provision of the MSBC or the City of Corcoran City Code. D. Section 102.8 Referenced Code and Standards. The codes and standards referenced in this code shall be those listed in Chapter 8 of the IPMC and shall be considered part of the requirements of this code to the prescribed extent of each such reference. Where differences occur between provisions of this Code and the MSBC, the most restrictive shall apply. E. Section 103.1 Creation of Agency. The Zoning and Land Use Division is hereby created and the official in charge thereof shall be known as the Code Compliance Official, hereinafter referred to as the “code official.” The function of the agency shall be the implementation, administration, and enforcement of the provisions of this code. F. Section 104.1 Fees. The fees for activities and services performed in carrying out responsibilities under this code shall be in amounts set forth by the City Council. G. Section 107.1 General Means of Appeal. In order to hear and decide appeals of orders, decisions, or determinations made by the code official relative to the application and interpretation of this code, the City Council shall serve as the Board of Appeals and Page 2 of 10 Adjustments and shall hold office at its pleasure. The board shall adopt rules of procedure for conducting its business and shall render all decisions and findings in writing to the appellant with a duplicate copy to the code official. H. Section 107.3 Qualifications. Not adopted. I. Section 108.1 Membership of Board. Not adopted. J. Section 109.4 Violation Penalties. Any person who shall violate a provision of this code, or fail to comply therewith, or with any of the requirements thereof, shall be prosecuted within the limits provided by state or local laws. Each day a violation continues after due notice has been served may be deemed a separate offense. K. Section 111.9 Restoration or Abatement. The structure or equipment determined to be unsafe by the code official is permitted to be restored to a safe condition. The owner, owner’s authorized agent, operator or occupant of a structure, premises or equipment deemed unsafe by the code official shall abate or cause to be abated or corrected such unsafe conditions either by repair, rehabilitation, demolition, or other approved corrective action. To the extent that repairs, alterations, or additions are made or a change of occupancy occurs during the restoration of the structure, such repairs, alterations, additions, or change of occupancy shall comply with the requirements of the MSBC. L. Section 201.3 Terms Defined in Other Codes. Where terms are not defined in this code and are defined in the MSBC, Minnesota State Fire Code (MSFC), Minnesota Fuel Gas Code, Minnesota Mechanical Code, Minnesota Plumbing Code, International Residential Code, International Zoning Code, or NFPA 70, such terms shall have the meanings ascribed to them as stated in those codes. M. Section 201.4 Terms Not Defined. Where terms are not defined through the methods authorized by this section, the Merriam-Webster’s Collegiate Dictionary Tenth Edition shall be used to define such terms. N. Section 202 Code Official Definition. The City’s Code Compliance Official will serve as the code official as defined in this code. The code official is charged with the administration and enforcement of this code, or any duly authorized representative. O. Section 302.4 Weeds. Not adopted. P. Section 302.7 Motor Vehicles. Not adopted. Q. Section 303.2 Enclosures. Not adopted. Page 3 of 10 R. Section 304.14 Insect Screens. Every door, window, and other outside opening required for ventilation of habitable rooms, food preparation areas, food service areas or any areas where products to be included or utilized in food for human consumption are processed, manufactured, packaged, or stored shall be supplied with approved tightly fitting screens of minimum 16 mesh per inch (16 mesh per 25 mm), and every screen door used for insect control shall have a self-closing device in good working condition. 1. Exception: Screens shall not be required where other approved means, such as air curtains or insect repellent fans, are employed. S. Section 306.1.1 Component Serviceability Unsafe Conditions. Where any of the following conditions cause the component or system to be beyond its limit state, the component or system shall be determined as unsafe and shall be repaired or replaced to comply with the MSBC as required for existing buildings: 1. Soils that have been subjected to any of the following conditions: 1.1 Collapse of footing or foundation system. 1.2 Damage to footing, foundation, concrete or other structural element due to soil expansion. 1.3 Adverse effects to the design strength of footing, foundation, concrete or other structural element due to a chemical reaction from the soil. 1.4 Inadequate soil as determined by a geotechnical investigation. 1.5 Where the allowable bearing capacity of the soil is in doubt. 1.6 Adverse effects to the footing, foundation, concrete, or other structural element due to the ground water table. 2. Concrete that has been subjected to any of the following conditions: 2.1 Deterioration. 2.2 Ultimate deformation. 2.3 Fractures. 2.4 Fissures. 2.5 Spalling. 2.6 Exposed reinforcement. 2.7 Detached, dislodged or failing connections. 3. Aluminum that has been subjected to any of the following conditions: 3.1 Deterioration. 3.2 Corrosion. 3.3 Elastic deformation. 3.4 Ultimate deformation. 3.5 Stress or strain cracks. 3.6 Joint fatigue. 3.7 Detached, dislodged or failing connections. Page 4 of 10 4. Masonry that has been subjected to any of the following conditions: 4.1 Deterioration. 4.2 Ultimate deformation. 4.3 Fractures in masonry or mortar joints. 4.4 Fissures in masonry or mortar joints. 4.5 Spalling. 4.6 Exposed reinforcement. 4.7 Detached, dislodged or failing connections. 5. Steel that has been subjected to any of the following conditions: 5.1 Deterioration. 5.2 Elastic deformation. 5.3 Ultimate deformation. 5.4 Metal fatigue. 5.5 Detached, dislodged or failing connections. 6. Wood that has been subjected to any of the following conditions: 6.1 Ultimate deformation. 6.2 Deterioration. 6.3 Damage from insects, rodents, and other vermin. 6.4 Fire damage beyond charring. 6.5 Significant splits and checks. 6.6 Horizontal shear cracks. 6.7 Vertical shear cracks. 6.8 Inadequate support. 6.9 Detached, dislodged or failing connections. 6.10 Excessive cutting and notching. 7. Exceptions: 7.1 Where substantiated otherwise by an approved method. 7.2 Demolition of unsafe conditions shall be permitted where approved by the code official. T. Section 308.1: Accumulation of Rubbish or Garbage. Exterior property and premises, and the interior of every structure, shall be free from any accumulation of rubbish or garbage pursuant to the nuisance provisions of the City Code. U. Section 502.5: Public Toilet Facilities. Public toilet facilities shall be maintained in a safe, sanitary, and working condition in accordance with the Minnesota Plumbing Code. Except for periodic maintenance or cleaning, public access and use shall be provided to the toilet facilities at all times during occupancy of the premises. Page 5 of 10 V. Section 505.1: General Water System. Every sink, lavatory, bathtub or shower, drinking fountain, water closet, or other plumbing fixture shall be properly connected to either a public water system or to an approved private water system. Kitchen sinks, lavatories, laundry facilities, bathtubs, and showers shall be supplied with hot or tempered and cold running water in accordance with the Minnesota Plumbing Code. W. Section 602.3: Heat Supply. Every owner and operator of any building who rents, leases, or lets one or more dwelling units or sleeping units on terms either expressed or implied, to furnish heat to the occupants thereof shall supply heat during the period from October 1 to April 30 to maintain a minimum temperature of 68-degrees Fahrenheit (20-degrees Celsius) in all habitable rooms, bathrooms, and toilet rooms. Exceptions: 1. When the outdoor temperature is below the winter outdoor design temperature for the locality, maintenance of the minimum room temperature shall not be required provided that the heating system is operating at its full design capacity. The winter outdoor design temperature for the locality shall be as indicated in the Minnesota Plumbing Code. 2. In areas were the average monthly temperature is above 30-degrees Fahrenheit (- 1-degree Celsius), a minimum temperature of 65-degrees Fahrenheit (18-degrees Celsius) shall be maintained. X. Section 602.4: Occupiable Work Spaces. Indoor occupiable work spaces shall be supplied with heat during the period from October 1 to April 30 to maintain a minimum temperatures of 65-degree Fahrenheit (18-degree Celsius) during the period the spaces are occupied. Exceptions: 1. Processing, storage, and operation areas that require cooling or special temperature conditions. 2. Areas in which persons are primarily engaged in vigorous physical activities. Y. Section 604.3.1.1 Electrical Equipment. Electrical distribution equipment, motor circuits, power equipment, transformers, wire, cable, flexible cords, wiring devices, ground fault circuit interrupters, surge protectors, molded case circuit breakers, low-voltage fuses, luminaires, ballasts, motors and electronic control, signaling and communication equipment that have been exposed to water shall be replaced in accordance with the provisions of the MSBC. Exception: The following equipment shall be allowed to be repaired where an inspection report from the equipment manufacturer or approved manufacturer’s representative indicates that the equipment has not sustained damage that requires replacement: 1. Enclosed switches, rated not more than 600 volts or less. Page 6 of 10 2. Busway, rated not more than 600 volts. 3. Panelboards, rated not more than 600 volts. 4. Switchboards, rated not more than 600 volts. 5. Fire pump controllers, rated not more than 600 volts. 6. Manual and magnetic motor controllers. 7. Motor control centers. 8. Alternating current high-voltage circuit breakers. 9. Low-voltage power circuit breakers. 10. Protective relays, meters, and current transformers. 11. Low- and medium-voltage switchgear. 12. Liquid-filled transformers. 13. Cast-resin transformers. 14. Wire or cable that is suitable for wet locations and whose ends have not been exposed to water. 15. Wire or cable, not containing fillers, that is suitable for wet locations and whose ends have not been exposed to water. 16. Luminaires that are listed as submersible. 17. Motors. 18. Electronic control, signaling, and communication equipment. Z. Section 604.3.2.1: Electrical Equipment. Electrical switches, receptacles, and fixtures, including furnace, water, heating, security system and power distribution circuits, that have been exposed to fire, shall be replaced in accordance with the provisions of the MSBC. Exception: Electrical switches, receptacles, and fixtures that shall be allowed to be repaired where an inspection report from the equipment manufacturer or approved manufacturer’s representative indicates that the equipment has not sustained damage that requires replacement. AA. Section 701.2: General Means of Egress. A safe, continuous, and obstructed path of travel shall be provided from any point in a building or structure to the public way. Means of egress shall comply with the MSBC. BB. Section 702.2: Aisles. The required width of aisles in accordance with the Minnesota State Fire Code shall be unobstructed. CC. Section 702.3: Locked Doors. Means of egress doors shall be readily openable from the side from which egress is to be made without the need for keys, special knowledge or effort, except where the door hardware conforms to that permitted by the MSBC. DD. Section 702.4: Emergency Escape and Rescue Openings. Required emergency escape and rescue openings shall be maintained in accordance with the code in effect at the Page 7 of 10 time of construction, and both of the following: 1. Required emergency escape and rescue openings shall be operational from the inside of the room without the use of keys or tools. 2. Bars, grilles, grates or similar devices are permitted to be placed over emergency escape and rescue openings provided that the minimum net clear opening size complies with the code that was in effect at the time of construction and the unit is equipped with smoke alarms installed in accordance with the MSBC. Such devices shall be releasable or removable from the inside without the use of a key, tool, or force greater that which is required for normal operation of the escape and rescue opening. EE. Section 703.2: Unsafe Conditions Fire-Resistance Ratings. Where any components are not maintained and do not function as intended or do not have the fire resistance required by the code under which the building was constructed or altered, such components or portions thereof shall be deemed unsafe conditions in accordance with the MSFC. Components or portions thereof determined to be unsafe shall be repaired or replaced to conform to that code under which the building was constructed or altered. Where the condition of components is such that any building, structure, or portion thereof presents an imminent danger to the occupants of the building, structure, or portion thereof, the fire code official shall act in accordance with the MSFC. FF. Section 703.7 Vertical Shafts. Interior vertical shafts, including stairways, elevator hoistways, and service and utility shafts, which connect two or more stories of a building shall be enclosed or protected as required in the MSFC. New floor openings in existing buildings shall comply with the MSBC. GG. Section 704.1 Inspection, Testing and Maintenance. Fire Protection and life safety systems shall be maintained in accordance with the MSFC in an operative condition at all times, and shall be replaced or repaired where defective. HH. Section 704.1.2 Required Fire Protection and Life Safety Systems. Fire protection and life safety systems required by this code, the MSFC or the MSBC shall be installed, repaired, operated, tested, and maintained in accordance with this code. A fire protection and life safety system for which a design option, exception, or reduction to the provisions of this code, the MNFC or the MNBC has been granted shall be considered to be a required system. II. Section 704.1.3 Fire Protection Systems. Fire protection systems shall be inspected, maintained, and tested in accordance with the following MSFC requirements: 1. Automatic sprinkler systems, see Section 903.5. Page 8 of 10 2. Automatic fire-extinguishing systems protecting commercial cooking systems, see Section 904.12. 3. Automatic water mist extinguishing systems, see Section 904.11. 4. Carbon dioxide extinguishing systems, see Section 904.8. 5. Carbon monoxide alarms and carbon monoxide detection systems, see Section 915.6. 6. Clean-agent extinguishing systems, see Section 904.10. 7. Dry-chemical extinguishing systems, see Section 904.6. 8. Fire alarm and fire detection systems, see Section 907.8. 9. Fire department connections, see Sections 912.4 and 912.7. 10. Fire pumps, see Section 913.5. 11. Foam extinguishing systems, see Section 904.7. 12. Halon extinguishing systems, see Section 904.9. 13. Single- and multiple-station smoke alarms, see Section 907.10. 14. Smoke and heat vents and mechanical smoke removal systems, see Section 910.6. 15. Smoke control systems, see Sections 909.3 and 909.20. 16. Wet-chemical extinguishing systems, see Section 904.5. JJ. Section 704.4.2 Removal of Existing Occupant-Use Hose Lines. The fire code official is authorized to permit the removal of existing occupant-use hose lines where all the following apply: 1. The installation is not required by the MSFC or MSBC. 2. The hose line would not be utilized by trained personnel or the fire department. 3. The remaining outlets are compatible with local fire department fittings. KK. Section 704.4.3 Termination of Monitoring Service. For fire alarm systems required to be monitored by the MSFC, notice shall be made to the fire code official whenever alarm monitoring services are terminated. Notice shall be made in writing by the provider of the monitoring service being terminated. LL. Section 704.5.1 Fire Department Connection Access. Ready access to fire department connections shall be maintained at all times and without obstruction by fences, bushes, trees, walls, or any other fixed or movable object. Access to fire department connections shall be approved by the fire chief. Exception: Fences, where provided with an access gate equipped with a sign complying with the legend requirements of Section 912.5 of the MSFC and a means of emergency operation. The gate and the means of emergency operation shall be approved by the fire chief and maintained operational at all times. MM. Section 704.6.4 Smoke Detection System. Smoke detectors listed in accordance with UL 268 and provided as part of the building’s fire alarm system shall be an acceptable alternative to single- and multiple-station smoke alarms and shall comply with the following: Page 9 of 10 1. The fire alarm system shall comply with all applicable requirements in Section 907 of the MSFC. 2. Activation of a smoke detector in a dwelling or sleeping unit shall initiate alarm notification in the dwelling or sleeping unit in accordance with Section 907.5.2 of the MSFC. 3. Activation of a smoke detector in a dwelling or sleeping unit shall not activate alarm notification appliances outside of the dwelling or sleeping unit, provided that a supervisory signal is generated and monitored in accordance with Section 907.6.6 of the MSFC. NN. Section 705.1 General Carbon Monoxide Alarms and Detection. Carbon monoxide alarms shall be installed in dwellings in accordance with Section 1103.9 of the MSFC. OO. Section 8 – ICC Referenced Standards. ICC referenced standards were replaced with the following Minnesota standards: MSBC-20 Minnesota State Building Code MSFC-20 Minnesota State Fire Code MFGC-22 Minnesota Fuel Gas Code MMC-20 Minnesota Mechanical Code MPC-20 Minnesota Plumbing Code PP. Section A101 Boarding Standard. Appendix A of the International Property Maintenance Code is adopted by reference and incorporated in the City Code in whole as if it was set out in full, subject to the following amendments: 1. Section A102.1 Boarding Sheet Material. Boarding sheet material shall be minimum ½-inch thick (12.7 mm) wood structural panels complying with the MSBC. 2. Section A102.2 Boarding Framing Material. Boarding framing materials shall be minimum nominal 2-inch by 4-inch (51 mm by 102 mm) solid sawn lumber complying with the MSBC. 3. Section A102.3 Boarding Fasteners. Boarding fasteners shall be a minimum strength and size to adequately affix the material to the building while preventing entry. 4. Section A103 Installation. Not adopted. 5. Section A104 Referenced Standard. Not adopted. QQ. Section B101 Board of Appeals. Appendix B of the International Property Maintenance Code is adopted by reference and incorporated in the City Code in whole as if it was set out in full, subject to the following amendments: Page 10 of 10 1. Section B101.1 Scope. The City of Corcoran’s Board of Appeals and Adjustments will serve as the board of appeals for the purpose of hearing application for modification of this code pursuant to the provisions of Section 107 (Means of Appeals). The board shall operate in accordance with this section, and shall be authorized to hear evidence from appellants and the code official pertaining to the application and intent of this code for the purpose of issuing orders pursuant to these provisions. 2. Section B101.2 Application for Appeal. Any person shall have the right to appeal a decision of the code official to the board. A written appeal request shall be based on a claim that the intent of this code or the rules legally adopted hereunder have been incorrectly interpreted, the provisions of this code do not fully apply, or an equally good or better form of construction is proposed. The written request shall be filed with the code official within 30 days after the notice was mailed. 3. Section B101.3 Membership of The Board. Not adopted. ORDINANCE By Fletcher Amending Title 12, Chapter 244 of the Minneapolis Code of Ordinances relating to Housing: Maintenance Code. The City Council of the City of Minneapolis do ordain as follows: Section 1. That Section 244.1845 of the above-entitled ordinance be amended to read as follows: 244.1845. Requirements applicable to short-term rental dwelling units. (a) Rental dwelling license required for non-homestead status property. No person shall allow any non-homestead status short-term rental dwelling unit to be occupied, or let or offer to let to another any non-homestead status short-term rental dwelling unit for occupancy, or charge, accept or retain rent for any non-homestead status short- term rental dwelling unit unless the owner has a valid rental dwelling license or provisional license under the terms of this article. (b)Short-term rental registration required for homestead status property. No person shall allow any homestead status short-term rental dwelling unit to be occupied, or let or offer to let to another any homestead status short-term rental dwelling unit for occupancy, or charge, accept or retain rent for any homestead status short-term rental dwelling unit unless the owner has obtained a valid short-term rental registration under the terms of this article. (1)The requirements of subsection (b) shall apply to any homestead status short-term rental dwelling unit that is primarily owner-occupied except for the duration of any short-term rental period. (2)A short-term rental registration must include any information deemed necessary by the director and may be obtained through any readily available means, written or electronic, as deemed appropriate and expeditious by the director. This information may include the identification of a responsible party, if other than the owner, who shall be a natural person responsible for the management of the property during and associated with any use as a short-term rental to the same extent a rental license agent or contact person is legally responsible pursuant to Section 244.1840(3). The annual fee for a short-term rental registration shall be as established in the license fee schedule. Any registered property shall be subject to lawful inspection by the director and the director's authorized representatives upon a schedule determined by the director or upon complaint. (3)Any short-term rental registration may be denied, canceled or revoked upon notice and the provision of an opportunity for hearing for good cause, including the violation of, or noncompliance with, any registration requirement or standard, or any applicable law, statute or ordinance. Any such hearing shall take place pursuant to Chapter 2 of this Code and follow the procedures established in section 259.255. (c)Regulations applicable to all short-term rental dwelling units. (1)No rental dwelling classified as Tier III by the director shall be eligible for short-term rental registration or for use as a short-term rental dwelling. Short-Term Rental Ordinance Example 1 (d)(2) Any person operating a short-term rental property which includes a swimming pool that does not possess a current and valid pool license shall, during the course of any such rental period, post a sign indicating that the pool is not licensed and inspected. (3)The owner, identified rental dwelling license agent, or responsible party shall include the applicable short-term rental registration or license number on all advertisements, listings or postings of the unit; (4)The owner of any short-term rental dwelling unit required to be registered or licensed shall maintain liability insurance appropriate to cover the short-term rental use in the aggregate of not less than three hundred thousand dollars ($300,000) or conduct each short-term rental transaction through a short-term rental platform that provides equal or greater coverage; (5)Unless further restricted by occupancy laws, no short-term dwelling unit shall be occupied by more than ten (10) persons, regardless of property size. (6)The owner, identified rental dwelling license agent, or responsible party shall post the following information in a conspicuous place within each dwelling unit used as a short-term rental: a.Emergency contact information that is accessible at all times; b.Contact information for the property owner, identified rental dwelling license agent, or responsible party; c.Street address; d.Floor plan indicating fire exits and escape routes; e.Information about how a guest can contact and utilize the City’s 311 system; and f.The short-term rental registration number. (e)(d) Short-term rental registration is not required for a homestead status property if the owner lives in the dwelling unit, only a portion of the dwelling unit is rented, and the owner occupies the dwelling unit during the rental period. (e)Regulations applicable to non-homestead status licensed short-term rental dwelling units in buildings with fewer than twenty (20) dwelling units. The owners and identified rental dwelling license agents of any short-term rental dwelling units that are located in buildings with fewer than twenty (20) units shall comply with the following requirements, in addition to any other applicable requirements including applying for and obtaining a rental dwelling license classified as a short-term rental dwelling license: (1)Provide a twenty-four (24) hour accessible and responsive telephone number to guests and required neighbors for complaint lodging and resolution; (2)Complete a pre-inspection checklist in a manner and format as determined by the director; (3)Complete and submit a management plan for the licensed unit addressing matters such as noise, trash, parking, or any other matters deemed necessary by the director, in a format and manner as determined by the director; (4)Complete, submit, and provide in a manner, content, and format as determined by the director a short- term rental neighbor notification letter directed to all property owners, tenants, and occupants of any property within the subject building or located within fifty (50) feet of the perimeter of the property line in which the short-term rental dwelling unit is located; and (5)In buildings with fewer than twenty (20) units, no owner or licensee shall own or have an interest in more than one (1) licensed short-term rental dwelling unit. (f)Regulations applicable to non-homestead status licensed short-term rental dwelling units in buildings with twenty (20) or more dwelling units. In addition to any other applicable requirements, the owners and identified rental dwelling license agents of any short-term rental dwelling units required to be licensed that are located in buildings with twenty (20) or more units shall comply with the following requirements: (1)Comply with and fulfill the requirements of subsection (e), subparts (1) through (4), and apply for and obtain a rental dwelling license classified as a short-term rental dwelling license; and (2)The short-term rental dwelling units must comprise no more than ten (10) percent in relation to the total dwelling units in the building, and the building and use must comply with all applicable zoning requirements. Condominium units shall be exempt from the ten (10) percent cap but must otherwise comply with any valid association requirements and restrictions. Short-Term Rental Ordinance Example 2 NATIONAL LEAGUE OF CITIES About the National League of Cities The National League of Cities (NLC) is the voice of America’s cities, towns and villages, representing more than 200 million people. NLC works to strengthen local leadership, influence federal policy and drive innovative solutions. NLC’s Center for City Solutions provides research and analysis on key topics and trends important to cities, creative solutions to improve the quality of life in communities, inspiration and ideas for local officials to use in tackling tough issues, and opportunities for city leaders to connect with peers, share experiences and learn about innovative approaches in cities. 2022 ©National League of Cities. All Rights Reserved. All photo credited to Getty Images, 2022. Authors Tina Lee, Senior Research Specialist, National League of Cities Lauren Lowery, Director, Housing & Community Development, National League of Cities Lena Geraghty, Director, Sustainability and Innovation, National League of Cities Kyle Funk, Program Specialist, National League of Cities Samantha Carr, Housing & Community Development Intern, National League of Cities Acknowledgments The authors wish to recognize Matthew Disler of the Harvard Berkman Klein Center for Internet & Society for his contributions to this report and Kristin Szakos for copy editing. The authors also wish to thank the city staff and elected officials who agreed to be interviewed to inform this report, including those from Fayetteville, AR, San Diego, CA, Charleston, SC, Lake Placid, NY, Columbus, OH, and Henderson, NV. Contents 4 Foreword 7 Introduction 8 Defining Short-Term Rentals 8 What is a Short-Term Rental? 9 What Can Communities Regulate? 10 The Issue 12 Recommendations: Short-Term Rental Regulations 14 Understand the Landscape 14 Gather Data 15 Engage a Diverse Group of Stakeholders 18 Identify Policy Goal(s) 20 Develop and Pass Regulations 20 Apply a Racial Equity Lens 21 Pass Regulations Early 21 Craft Simple Regulations 24 Institute a Permit Requirement 25 Determine Fines and Fees 27 Establish a Clear Taxing Model 28 Negotiate an Agreement with Platforms 30 Enforcement 30 Dedicate Resources to Enforcement 32 Ensure Extensive Communication and Marketing 33 Move Registration and Administration Systems Online 35 Revisit and Adapt 35 Establish a Feedback Loop 37 Conclusion 38 Appendix 38 Voluntary Collection Agreements (VCAs) 40 Endnotes INTERACTIVE 4 Short-Term Rental Regulations: A Guide for Local Governments Foreword IN RECENT YEARS, short-term rentals have increased in cities, towns and villages across the United States. As a result of this growth, local leaders have had to grapple with competing benefits and challenges – in particular, how to ensure a healthy stock of affordable housing and how to support local tourism and economic development opportunities. One of the top priorities for city leaders today is to ensure that residents and visitors to their communities have access to safe, affordable lodging. These competing priorities make passing regulations difficult, which is why it’s not surprising that short-term rentals have become a common topic of discussion among our members at the National League of Cities (NLC). Members faced with these challenges often ask us: “What tools are available to assist me with regulating short-term rentals in my community?” This persistent question led NLC to research short-term rental regulations in cities across the country and ultimately produce Short-Term Rental Regulations: A Guide for Local Governments. Based on an analysis of 60 short-term rental ordinances, this action guide lays out a detailed overview of best practices for cities to develop and pass short-term rental regulations in their communities. While no two municipalities face the same opportunities and challenges when it comes to regulating short-term rentals, this research provides insight into how to chart a path forward successfully. This guide recommends local leaders create and enforce firm and fair regulations by focusing on clear policy objectives, centering racial equity as a critical component in their planning and actively engaging with relevant stakeholders throughout the process. Short-term rentals can open a swath of opportunity for homeowners looking to make additional dollars, while also providing economic development opportunities in neighborhoods that may not generally see high levels of tourism. By bringing community and industry leaders together, local leaders can create policies that work for both – and maximize the potential value of short-term rentals for hosts, guests and neighbors alike, all while protecting the affordability of neighborhoods. While short-term rentals are a prominent issue today, this challenge is not a new one for local leaders. There are often difficulties that come with maximizing economic growth while protecting community interests. Mayors, councilmembers and other local elected officials are well-equipped to help bring stakeholders together to understand and navigate potential trade-offs. Local leaders have an incredibly important role to play in capitalizing on the benefits of short-term rentals and minimizing potential negative impacts. I hope this resource will help your community make decisions about short-term rentals that are best for your residents. Clarence E. Anthony CEO AND EXECUTIVE DIRECTOR National League of Cities NATIONAL LEAGUE OF CITIES 7 Introduction THE RAPID GROWTH of short-term rentals in cities, towns and villages across the U.S. has caused much controversy. From contentious City Hall meetings where residents advocate for more stringent or more relaxed regulations to lengthy and expensive legal battles between cities and short-term rental platforms, cities can get caught in the cross-hairs of a complicated policy issue. Short-term rentals present no shortage of challenges for local leaders, as they can affect housing availability and affordability, local tourism and economic development, neighborhood wellbeing, and health and safety. However, many cities have learned important lessons in navigating these complex issues and offer some best practices for others to learn from. Regulation of short-term rentals has proven to be an important and effective tool in making short-term rentals work for all parts of the community. Regulations that define what short-term rentals are and have appropriate mechanisms in place should intervention be necessary have helped city leaders steer the conversation toward solutions and meeting community needs. The purpose of regulating short-term rentals is not to be overly punitive or to prohibit them, but to put safeguards and appropriate enforcement mechanisms in place for when problems arise. This Action Guide will not settle debates about the specific impacts of short- term rentals on each community. Instead, it aims to equip local leaders with appropriate information and tools to adopt or amend ordinances that serve their community best: policies that are equitable; that protect municipal interests such as health and safety and housing affordability; that preserve the residential quality of neighborhoods; and that enable responsible and eligible residents to earn some additional income. NATIONAL LEAGUE OF CITIES 9 9 What Can Communities Regulate? Regulations vary, depending on the needs of the locality issuing them. In a community where vacant properties are a problem, regulations might focus on upkeep and oversight. In a community where housing stock is scarce, regulations might be put in place to limit the number of properties lost to residential rentals. Generally, however, regulations include some combination of the following provisions: PROVISIONS DETAILS LOCATION AND USE Geographic limits: Cities can decide to limit the availability of STRs in specific areas of cities, such as particular residential areas or neighborhoods with specific historic character. Commercial-residential distinctions: Cities can establish different rules for properties in residential and commercial areas to account for the different interests of communities in each of these areas. TIMING Primary residence requirements: Cities can require that the STR is occupied by the host for most of the year, and/or that the rental is in or part of the owner’s primary residence. Day limits: Cities can include provisions capping the number of days per year that hosts can rent their STR. MANNER OF RENTAL Registration and licensing: Cities can require hosts to register their properties with the city and can require rental platforms (e.g., Airbnb, Vrbo, etc.) to ensure that properties listed on their sites are properly registered. Taxes: Cities can require that hosts pay transient occupancy taxes, which are taxes on what guests pay for temporary lodging in the city and are usually collected and remitted by hotels, motels and similar businesses. Cities can also work with STR platforms and other third-party providers to minimize the burden of tax remittance. Occupancy limits: Cities can limit the number of guests per stay, usually by establishing a guests-per-bedroom or per-property cap. Health and safety regulations: Cities can require STRs to have fire safety equipment and carbon monoxide detectors; display emergency information for guests; adopt measures to maintain a sanitary residence; and adopt plans for emergencies, among other requirements. Noise and event regulations: Cities can restrict the use of STRs for large gatherings and events, and they may explicitly require that guests comply with existing noise, trash and parking ordinances. Defining Short-Term Rentals What is a Short-Term Rental? In general, short-term rental (STR) refers to an activity in which one party, the “host,” agrees to rent out all or part of a home to another party, the “guest,” on a temporary, time-limited basis. The precise legal definition of a short-term rental varies by community. Most short-term rental ordinances include details on the following types of provisions that define short-term rentals for a particular community: LOCATION AND USE: Where and how many short-term rentals are allowed TIMING: How long short-term rentals can be rented for MANNER OF RENTAL: Additional requirements for hosts and guests NATIONAL LEAGUE OF CITIES 11 The Issue Short-term rentals are not a new concept. Companies like Vrbo, HomeAway, Couchsurfing and Craigslist have offered consumers short-term rental options since the late 1990s without much controversy.1 The meteoric growth of the short-term rental industry in the 2010s changed that. Companies like Airbnb, Vrbo, HomeAway and FlipKey grew in popularity while consumer appetite for more original, authentic and local experiences increased, driving demand higher. As short-term rentals become more accessible to both hosts and users, use skyrocketed over a short period. But the meteoric success of short-term rental platforms has not been welcomed unreservedly. Common complaints are that short-term rentals can drive up local rents, limit the availability of long-term residential rentals, attract an influx of tourists and create excessive noise.2 Local leaders attempting to chart the pathway forward for short-term rentals in their communities must respond to many competing interests, making passing regulations and balancing those interests difficult. Some of these issues that must be considered include: Housing The research is divided on whether short-term rentals contribute to the housing crisis. Regardless of whether the exact impact on the housing market is measurable, it is undeniable that many cities in the U.S. face a housing crisis – due to a shortage of affordable housing, steady decline in federal investment in low-income housing, wage growth stagnation, etc. – and that short-term rentals may contribute to housing unaffordability and unavailability. Tourism Short-term rentals outside of the typical tourism areas in cities can be a boon to local economies, spreading dollars across the cities in ways that traditional lodging accommodations do not. On the other hand, cities with high tourism rates face a greater share of the negative impacts of short-term rentals in communities. In high-tourism communities, large numbers of whole home rentals can affect neighborhood cohesion, as they may stand empty for weeks at a time or experience high turnover in guests. Preemption Preemptive state laws can limit cities’ ability to regulate short-term rentals. The impacts of preemptive laws can range from a complete inability to regulate, to restrictions on the kinds of regulations that can be imposed. Public Health and Safety Poorly regulated and unsupervised short-term rentals can threaten the safety of neighborhoods for residents and guests alike. Party houses have become a significant point of contention in some communities. Guests may ignore or be unaware of noise, trash and parking ordinances. For myriad reasons — both within and outside of city control — cities may find it difficult to enforce the regulations they do have. Some ordinances are difficult for hosts and residents to understand and difficult for the city to enforce because they are overly complicated or poorly publicized. In other instances, cities may have no systematic way to identify hosts who are not in compliance or to keep track of what properties are being used for short-term rentals, and when. Understanding the most common barriers to effective regulation — unclear rules and lack of data — is key to making sound policy choices. Despite the limitations and challenges that city leaders face, local leaders can pass regulations that effectively balance competing interests, fit community needs, and most critically, are enforceable. NATIONAL LEAGUE OF CITIES 13 THE NATIONAL LEAGUE of Cities analyzed 60 short-term rental ordinances to inform this report across 30 indicators, including the legal definition of short-term rentals, regulations and enforcement. At least one city, town or village was selected in each state, with two cities, towns or villages selected for the top ten states by population (California, Texas, Florida, New York, Pennsylvania, Illinois, Ohio, Georgia, North Carolina and Michigan) to ensure that a diversity of local context was represented in the analysis. The recommendation sections (Understand the Landscape, Develop and Pass Regulations, Enforcement, and Revisit and Adapt) are meant to build off each other and should therefore be executed in chronological order. They are detailed in the section below. Recommendations: Short-Term Rental Regulations This Action Guide will help local leaders break down the process of developing a short-term rental ordinance, provide relevant city examples and identify key tips. The following recommendations are a menu of policy principles and good practices that cities should explore when establishing or updating their regulations, based on research into short-term rental ordinances and policies across the country. UNDERSTAND THE LANDSCAPE DEVELOP AND PASS REGULATIONS ENFORCEMENT REVISIT AND ADAPT  ŠGather Data  ŠEngage a Diverse Group of Stakeholders  ŠIdentify Policy Goal(s)  ŠApply a Racial Equity Lens  ŠPass Regulations Early  ŠCraft Simple Regulations  ŠInstitute a Permit Requirement  ŠDetermine Fines and Fees  ŠEstablish a Clear Taxing Model  ŠNegotiate an Agreement with Platforms  ŠDedicate Resources to Enforcement  ŠEnsure Extensive Communication and Marketing  ŠMove Registration and Administration Systems Online  ŠEstablish a Feedback Loop NATIONAL LEAGUE OF CITIES 15 14 Short-Term Rental Regulations: A Guide for Local Governments UNDERSTAND THE LANDSCAPE Before passing regulations, understand the local short-term rental landscape. This should involve extensive information gathering and thorough engagement with relevant stakeholders. Be mindful of what issues are associated with short-term rentals in your community to determine the goals your policy should meet. GATHER DATA While anecdotes are powerful, they are not a proxy for actual data to estimate the number and location of short-term rentals operating in a community. In some cases, data may be available through third-party platforms such as Inside Airbnb or AirDNA. Knowing approximately how many units may be on the market is critical to understanding the scope of the issue. KEY DATA POINTS INCLUDE: How many short-term rentals are operating in your community? What is the breakdown between hosted room rentals vs. whole home rentals? Where are short-term rentals operating in your community? What neighborhoods are most affected? What is the average daily price of short-term rentals vs. hotels? What is the occupancy rate of short-term rentals vs. hotels? How much revenue are short-term rental properties generating vs. hotels? Additional data sources that can help supplement short-term rental-specific data to develop a comprehensive picture of the local landscape can include tourism, housing and complaint data. Connect with local tourism boards to gather information such as how much money visitors are spending, where visitors are spending their money, where they are staying, where they are spending their time and how long they are staying. Leverage data sources such as the American Community Survey to understand the breakdown in renter vs. homeownership BULLSEYE-POINTER rates, vacancy rates and demographic information in different neighborhoods to contextualize short-term rentals in the broader housing landscape. Records of noise and nuisance complaints (e.g., through 311 calls or similar complaint or service request software) can also help cities understand where these complaints are filed and what they are. ENGAGE A DIVERSE GROUP OF STAKEHOLDERS Engage a network of stakeholders, including but not limited to tenants, landlords/homeowners, hotel and motel industry representatives, neighborhood organizations, housing advocates, tourism agencies and short-term rental platforms. This mix will look different for each city, but identifying relevant stakeholders will be key to understanding the challenges and opportunities each city faces. Hold virtual or in-person town hall meetings, drop in on various group meetings (e.g., landlord associations, property owner groups, neighborhood associations, etc.) and solicit comments from members of the public to gauge the perceptions of short-term rentals directly from community members. Cities can, for example, work with neighborhood associations to map areas especially strained by short- term rentals or tourism. Residents have the closest ear to the ground. City leaders should leverage this knowledge to their advantage. Cities have a lot to gain by partnering with platforms, but the relationship-building process can be contentious at times. These relationships are more likely to be positive when cities come to the discussion table with a clear goal in mind and communicate it with the platforms. POTENTIAL STAKEHOLDERS INCLUDE: Motel and lodge union or association Hotels or hotel union or association Realtor groups or associations Restaurant associations City Council Local planning groups and organizations Existing short-term rental operators Platforms (e.g., Airbnb, Expedia, etc.) Neighborhood associations Housing advocates Tourism agencies BULLSEYE-POINTER NATIONAL LEAGUE OF CITIES 17 16 Short-Term Rental Regulations: A Guide for Local Governments CITY SPOTLIGHT: SAN DIEGO, CA While drafting its short-term rental ordinance, the City of San Diego engaged a wide variety of stakeholders including: C ITY SPOTLIGHT: FAYETTEVILLE, AR In 2018, the City of Fayetteville’s Sustainability Department worked with the University of Arkansas’ Public Policy Department to explore short-term rentals. The students leveraged data sources such as AirDNA to gather the following information: ŠActive rentals ŠAverage booked properties ŠOccupancy rate ŠAverage booking rate per night ŠAverage Airbnb private room price (Fayetteville) ŠAverage hotel room price (Fayetteville) ŠAverage Airbnb private room price (Downtown Fayetteville) ŠAverage hotel room price (Downtown Fayetteville)3 Based on this information, the students generated maps of short-term rental locations in the Fayetteville area, noting a large concentration of Airbnb rentals in the downtown area. This analysis was presented to city staff and elected officials in December 2018 to inform their discussion on short-term rentals in Fayetteville. ŠUnite Here, a union for motel/lodges ŠNeighborhood groups ŠHotel stakeholders, including the hotel/motel association ŠRealtor groups and associations ŠThe restaurant association ŠCity Council ŠLocal planning boards and organizations ŠPre-existing STR operators ŠExpedia Group and Airbnb A staff member from the San Diego City Council conducted meetings with the stakeholders. The meeting format and length varied. The city representative sometimes met stakeholders individually or invited them to speak at public meetings. Those interested in engaging longer-term were invited to a permanent stakeholder group. The stakeholder group continues to provide input on short-term rental regulation implementation. Compromise was eventually reached, most notably in the form of a memorandum of understanding (MOU) between Unite Here and Expedia Group. Through the MOU, these two major stakeholders with different perspectives agreed to partner to help regulate the short-term rental market. The MOU also laid the foundation for the regulations that the city would push forward when engaging with other stakeholder groups. Following this engagement process, the ordinance was presented to the public, Planning Commission, mayor and Coastal Commission. The city found that putting the time in to build relationships and establish trust between the municipality and short-term rental platforms was essential to the ordinance’s success. Further, going into the process with a clear goal, while being mindful of what compromises could be made, allowed the city to achieve buy-in from a diversity of stakeholders. NATIONAL LEAGUE OF CITIES 19 18 Short-Term Rental Regulations: A Guide for Local Governments CITY SPOTLIGHT: CHARLESTON, SC The City of Charleston began regulating short-term rentals in 2012, when it adopted regulations that allowed commercially zoned properties to be rented as short-term rentals in the Cannonborough Elliotborough neighborhood. The goal of the regulation was to bring reinvestment into vacant, abandoned and distressed properties in the neighborhood. In subsequent years, the city saw an increase in the number of short-term rental units in Cannonborough Elliotborough and throughout Charleston. With a growing number of short-term rentals and an incoming mayor interested in revisiting short-term rental regulations, the policy moved to the forefront of Charleston’s agenda again. In 2016, the mayor and City Council began the process of updating short-term rental regulations by appointing a committee of local citizens to study and provide recommendations on short-term rentals. The committee included residents, representatives of the city’s preservation and historical societies, and tourism interests. Over time, a consensus was built around the goal to preserve the historic nature of downtown Charleston and allow short-term rentals to contribute to the local tourism economy, but only in such a way that did not alter the character of the city and negatively affect residents’ quality of life. Based on this consensus, the city developed a category-based short-term rental permitting system that requires most short-term rentals to be owner- occupied, and details additional requirements for properties located in downtown Charleston or in properties listed with the National Register of Historic Places. IDENTIFY POLICY GOAL(S) Develop a clear and concise policy goal for the short-term rental ordinance, driven by the city’s overarching goals and community input. Review strategic city plans (e.g., comprehensive housing plans, 5- and 10-year city visions, master plans) and identify top city priorities that may dovetail with priorities for short- term rentals. For example, a city may have a broader goal to advance housing affordability and may choose to focus on preserving the stock of affordable housing as a policy goal. Or a city may have the broader goal to attract more tourism and choose to focus its regulations on enabling short-term rentals with appropriate guardrails in place as the tourism industry continues to grow. Cities should be intentional about setting a goal or priority before drafting regulations. Without a clear “end goal,” cities can pass regulations that may not align with community priorities, and do not have effective mechanisms to accomplish them. By deciding on a policy and community goal, cities can craft a simpler and more targeted ordinance. Common goals, based on NLC’s analysis of 60 cities, include: ŠPrevent the loss of rental housing stock ŠSlow or prevent the overgrowth of STRs ŠBalance the needs and rights of property owners and neighbors ŠSupport tourism in a balanced way ŠCapture tax revenue ŠPreserve the residential quality of neighborhoods ŠCombat displacement ŠEnsure health and safety for guests and residents ŠAllow economic gain for residents KEY CONSIDERATION Balance competing expectations. By their nature, short-term rentals can be a contentious issue, with strongly vested interests on all sides. Each stakeholder will have to make concessions from their vision of “ideal” regulations, so helping the community and STR platforms understand that compromise is needed is critical to setting realistic expectations. Having a clear policy goal will also help coalesce stakeholders around the city’s broader vision and help justify policy choices. BULLSEYE-POINTER NATIONAL LEAGUE OF CITIES 21 20 Short-Term Rental Regulations: A Guide for Local Governments DEVELOP AND PASS REGULATIONS As the short-term rental industry continues to mature, it has become clear that complex regulations are not only cumbersome for hosts and residents of the city but are also unenforceable. Policies with clear goals, fair implementation and mechanisms for enforcement will help everyone. APPLY A RACIAL EQUITY LENS One of the most commonly cited benefits of short-term rentals is that they allow hosts to generate extra income from existing assets. While this may be true, hosting is most commonly available to those who own a home. Homeownership is inseparable from race and inequality in America. According to the latest estimates from the U.S. Census Bureau, the homeownership gap between White and Black households was 30 percent in 2020.4 According to NLC’s ordinance analysis, only 38 percent of cities surveyed specifically allowed tenants to host a short-term rental. Even then, cities that do explicitly state that tenants are allowed to host require them to acquire written consent from their landlords or a have a rental contract that allows them to sublet their unit. Tenants face a high barrier to host even in the minority of cities that allow them to. The ability of short-term rentals to democratize the tourism industry is overstated when a majority of Black, Indigenous and People of Color (BIPOC) do not have access to homeownership. Given the divide in homeownership in America, the direct economic benefit of short-term rentals may exacerbate existing inequality. There is also evidence that hosts may discriminate based on race and ethnicity. A 2017 study of Airbnb data found that “applications from guests with distinctively African-American names are 16 percent less likely to be accepted relative to identical guests with distinctively White names.”5 Airbnb has since made moves to fight bias and discrimination, including changing when guest pictures are shown to a host in the booking process.6 The city of Columbus, OH, passed a discrimination clause in its ordinance stipulating that a host shall not decline a potential guest, impose different terms or conditions, or discourage or indicate a preference for or against a guest based on race, gender, sexual orientation, gender identity or expression, color, religion, ancestry, national origin, age, disability, familial status or military status.7 KEY CONSIDERATION Recognize the role that short-term rentals play in exacerbating housing unaffordability. Consider dedicating some portion of STR permit or tax revenue towards affordable housing funds or homeownership opportunities, or earmarking general fund dollars for similar programs. Boulder, CO stipulates in its ordinance that “after administration expenses are met, any additional funds shall be placed in the city’s affordable housing fund."8 PASS REGULATIONS EARLY The short-term rental industry is rapidly growing. Given the complexity of the policy and regulatory space, be proactive and establish regulations before short-term rentals have a negative impact on the community. Establishing regulations gives cities the power to intervene when necessary. It is much easier to limit the spread of short-term rentals before they have proliferated than it is to retroactively remove them from the market. Establishing regulations also becomes increasingly controversial as more stakeholders have a vested interest in seeing them maintained. Even cities that have not yet faced the negative impacts of short-term rentals should pass regulations to regulate the STR market before they proliferate. KEY CONSIDERATION A common hurdle that cities face is what to do with pre-existing short-term rentals once a new ordinance is passed. In 58 percent of the cities reviewed in the NLC ordinance analysis, cities required existing hosts to comply with regulations or apply for a permit or license. Cities must communicate early and clearly with existing hosts about their responsibilities under a newly passed or revised ordinance to give them time to meet new regulations. CRAFT SIMPLE REGULATIONS Craft simple ordinances that are clear about policy goals. This will better equip leaders to engage in conversation with platforms, residents, property owners and other stakeholders invested in the ordinance outcome. Below is a list of common goals found in the ordinance analysis, and key ordinance elements to achieve those goals. BULLSEYE-POINTER BULLSEYE-POINTER 38% of cities surveyed specifically allowed tenants to host a short- term rental. NATIONAL LEAGUE OF CITIES 23 22 Short-Term Rental Regulations: A Guide for Local Governments Policy Levers to Pull to Achieve Common Policy Goals POLICY GOAL POLICY LEVERS PREVENT THE LOSS OF RENTAL HOUSING Prevent long-term rental properties from being converted to short-term rentals. Adopt a permit requirement and institute a host residency requirement, which should prevent homeowners from renting properties solely as short-term rentals and prevent properties from being purchased for the sole purpose of operating as short-term rentals. SLOW OR PREVENT THE OVERGROWTH OF STRS Prevent residential neighborhoods from being “overtaken” by guests to the detrimental of the neighborhood and residential feel of a neighborhood. Adopt a permit requirement and set a specific quota (number or percentage) on the number of short-term rental permits that will be distributed in a particular geographic area (e.g., neighborhood, census tract, ZIP code, etc.). COMBAT DISPLACEMENT The presence of short-term rentals can be particularly contentious in certain neighborhoods (e.g., neighborhoods that are experiencing displacement). Adopt a permit requirement and set a quota on the number of short- term rentals that are allowed to operate in a specific zoning district or neighborhood, particularly areas of the city that are at risk of, or are currently experiencing displacement pressure. Beware that such quotas can limit existing low-income homeowners’ ability to earn revenues from their homes. Therefore, consider how to equitably distribute permits. Consider dedicating some revenue generated from permit fees or taxes to affordable housing or home-ownership programs. Explicitly restrict affordable housing units from being rented out as short-term rentals. PRESERVE THE RESIDENTIAL QUALITY OF NEIGHBORHOODS Limit problem properties such as party houses or houses with complaints. Adopt a permit requirement and include a limit to the number of people that can stay in a short-term rental. This limit can be tied to the number of bedrooms in a short-term rental, or a total cap on the number that can stay in any type of property. A common limit that cities institute is two adults per bedroom. Require that short-term rental hosts provide their guests with a “Good Neighbor Guide” that summarizes all ordinances that guests are required to comply with during their stay (e.g., noise, trash, parking, etc.). Set restrictions on the number or percentage of short-term rentals that are allowed to operate in a particular neighborhood (or other geographic areas, such as census tract, ZIP code, etc.). BALANCE THE NEEDS AND RIGHTS OF PROPERTY OWNERS AND NEIGHBORS While lawful hosts have the right to rent their properties out, they should not infringe on the rights of neighbors. Enable hosts to rent out their homes while also ensuring that residents know where and how to file a complaint. Adopt a permit requirement and establish a process for revoking permits from properties in violation, such as a “three strikes” rule. If three verified complaints are filed within a certain time, the city can revoke a host’s permit. Establish a 24/7 hotline that residents can phone to report non-emergencies without calling the local police department or law enforcement. Require short-term rental permit hosts to list a local contact who can be reached should an issue arise.9 POLICY GOAL POLICY LEVERS ENSURE HEALTH AND SAFETY OF GUESTS AND RESIDENTS Ensure the safety of guests and residents, including minimizing public safety risks and noise and trash complaints. Adopt a permit requirement that requires each listing to include a local contact who can be reached at any time. Use this emergency contact if a complaint is filed. Stipulate that if the registered contact is not responsive, the host’s permit risks being terminated. Institute a permanent residency requirement. City leaders report that most complaints come from non-owner-occupied units. Hosts may be more invested in their property if they, too, call it home. Require that short-term rental hosts provide their guests with a “Good Neighbor Guide” that summarizes all ordinances that guests are required to comply with during their stay (e.g., noise, trash, parking, etc.). Require an inspection, or, if the city cannot carry out inspections, stipulate that the city has the right to inspect a property should sufficient suspicion arise that the property is not up to code. Institute a process for revoking permits from properties in violation, such as a “three strikes” rule. If three verified complaints are filed within a certain time, the city can revoke a host’s permit. CAPTURING TAX REVENUE Ensure that revenue is being collected. Adopt a permit requirement that will make it easier to identify whether hosts are complying and paying the appropriate taxes. Use permit and tax revenue to either hire additional staff or a third-party provider to help monitor compliance. Reach an agreement with platforms that requires them to automatically collect and remit taxes back to the city. Be wary of the transparency of the tax remittance process and ensure that the city’s enforcement powers are not stifled. SUPPORT TOURISM IN A BALANCED WAY Tourism is a key component to many local economies and short-term rentals can play a role in facilitating tourism without impacting residents if done in a balanced way. Adopt a permit requirement and set an annual permit reapplication. Make clear that applications can be denied if regulations change. Adopting a formal permit requirement will not deter hosts from participating, so long as the permitting process is not overly cumbersome. Ensure the permit fees are reasonable and tied to the cost of administering the permit program. ALLOW FOR ECONOMIC GAIN FOR RESIDENTS Short-term rentals can support wealth building for community members, although city leaders must pay attention to who is eligible to host. Adopt a permit requirement. The permit system should be simple and easy to navigate, particularly if the city is trying to encourage more permanent residents to host on a part-time basis. If the administrative burden is too high, few will be willing to put in the effort. NATIONAL LEAGUE OF CITIES 25 24 Short-Term Rental Regulations: A Guide for Local Governments INSTITUTE A PERMIT REQUIREMENT Enforceable short-term rental ordinances require owners who want to host short- term rentals to acquire a permit before renting. In general, a permit requirement allows local governments to create and maintain a database of units and contact information for properties that are operating as short-term rentals. The information provided in an application is key to enforcing the ordinance, allowing the city to have a point of contact to check in with when a property is not in compliance.10 Without information on who is operating short-term rentals, cities are effectively rendered helpless in enforcing their regulations. Having an active database of short-term rentals in operation is key to moving from a reactive to a proactive approach to enforcement. To ensure that hosts are acquiring permits, the city must have a mechanism to check to ensure compliance. Some cities, like San Francisco, have negotiated agreements with platforms that require the platform to put a permit number on the host listing.11 In other cases, cities have hired third-party platforms to aid their enforcement efforts. The City of Nashville, TN, uses Granicus’s Host Compliance, a short-term rental compliance monitoring platform, to support enforcement efforts. According to Nashville officials, the Code Department was struggling to enforce its regulations when they were relying on a complaint-based process. The city was manually identifying STR addresses. With more than 60 active rental websites and private addresses and contact information, it proved to be too herculean an effort to maintain. Host Compliance’s online portal enables the city to identify illegal operators before there is a complaint, moving from reactive to proactive enforcement. Since implementing Host Compliance, Nashville has more than doubled its compliance rate to 91 percent.12 KEY CONSIDERATION Without a clear and streamlined application or licensing process, applications may backlog. This leads to an unhappy and distrustful community and may encourage illegal rentals to operate while they are in the process of being considered for a permit. In some cases, operators will purposely and continuously file for permits and operate while under consideration. Always tie the permit to the person, not the parcel. This will allow for natural attrition over time (e.g., someone sells their home, and the new owner must reapply for a short-term rental permit). BULLSEYE-POINTER DETERMINE FINES AND FEES Many cities adopt fine structures to incentivize compliance by short-term rental hosts. According to NLC’s analysis, fines range from $200 a day to $2,000 per violation, which may escalate each day. Beyond deciding the fine structure, cities must have adequate staff and resources to identify hosts who are not in compliance and communicate to hosts how to stay in compliance and avoid violations. Fines should be proportionate to or more than the economic gains that potential violators can realize from breaking the rules, and should escalate for repeat violators, including the threat of revocation of a permit or license. Host Compliance offers the following fines and fees schedule for cities to consider: Example Fine Schedule 1st violation 2nd violation 3rd violation 4th violation Fine for advertising a property for short-term rent (online or offline) without first having obtained a permit or complying with local listing requirements $200 per day $400 per day $650 per day Upon the fourth or subsequent violation in any twenty- four month period, the local government may suspend or revoke any permit. The suspension or revocation can be appealed.Fine for violating any other requirements of the local government’s short-term rental regulation $250 per day $500 per day $750 per day Notes: a. Any person found to be in violation of this regulation in a civil case brought by a law enforcement agency shall be ordered to reimburse the local government and other participating law enforcement agencies their full investigative costs, pay all back- owed taxes, and remit all illegally obtained short-term rental revenue proceeds to the local government. b. Any unpaid fine will be subject to interest from the date on which the fine became due and payable to the local government until the date of payment. c. The remedies provided for in this fine schedule are in addition to, and not in lieu of, all other legal remedies, criminal or civil, which may be pursued by the local government to address any violation or other public nuisance. Source: Host Compliance NATIONAL LEAGUE OF CITIES 27 26 Short-Term Rental Regulations: A Guide for Local Governments CITY SPOTLIGHT: LAKE PLACID, NY The Village of Lake Placid collaborated with its justice court to define a short-term rental fine structure based on other successful cases. Lake Placid’s short-term rental fines range from $350 to $1,000 for the first violation plus the costs that the village has incurred for enforcement (e.g., staff time and attorney fees). Each week that the violation is not remedied constitutes a separate offense. The second violation that occurs within five years will incur a fine of between $1,000 and $3,000. Short-term rental violations can be appealed within 30 days to the joint Town of North Elba/ Village of Lake Placid Short-Term Rental Appeals Board by either the short- term rental property owner or the complainant.13 In most cases, hosts do not intentionally violate regulations, and disputes are often settled without the host incurring a fine. ESTABLISH A CLEAR TAXING MODEL Be mindful that there are multiple ways to capture revenue. In most cases, the owner/host is responsible for remitting taxes back to the city; however, several cities are trying to move the collection burden from hosts to the platforms. According to NLC’s analysis, 82 percent of surveyed cities require the host to remit taxes directly to the city, while just 5 percent require the platform to collect and remit taxes on their behalf. Cities like Annapolis, MD, and Charleston, SC, require platforms to remit taxes back to the city on behalf of hosts, automatically collecting tax revenue from a booking when it is made. While it may be easier for cities to require platforms to remit taxes, beware that there is some ongoing controversy around whether cities get back all the taxes they are owed. Several cities in South Carolina, including Charleston, are suing platforms, alleging that they are not remitting full taxes.14 In addition to the transient occupancy tax, some city councils may add an additional tax or surcharge on short-term rentals. For example, Chicago, IL, passed a 4 percent surcharge in 2016 and another 2 percent surcharge in 2018.15 The surcharge funds supportive homelessness services and enforcement of the ordinance.16 KEY CONSIDERATION Be mindful of how difficult it may be for hosts to remit taxes to the city. If a host has to remit taxes directly, consider how to make that process as simple and streamlined as possible. This not only makes it easier for hosts but ensures that the city is capturing more of the tax revenue it is owed. Include clear and concise instructions on how to remit taxes on the city’s webpage and a user-friendly platform to make payments. Consider sending notifications to all short-term rental hosts about upcoming tax payments. BULLSEYE-POINTER 82% of cities require the host to remit taxes directly to the city, while 5 percent require the platform to collect and remit taxes of hosts behalf. NATIONAL LEAGUE OF CITIES 29 28 Short-Term Rental Regulations: A Guide for Local Governments NEGOTIATE AN AGREEMENT WITH PLATFORMS Cities have had varying success in building helpful agreements with platforms. Cities have a lot to gain by partnering with platforms; however, the relationship-building process can be contentious at times. These relationships are more likely to be positive when cities come to the discussion table with a clear goal in mind and communicate it with platforms. Cities may have the opportunity to negotiate agreements with platforms, such as voluntary collection agreements (VCAs) or memorandums of understanding (MOUs). Voluntary Collection Agreements A Voluntary Collection Agreement (VCA) typically involves a short- term rental platform agreeing to collect and remit transient occupancy taxes on behalf of its hosts. Agreements generally allow local governments to audit the platform, rather than the operator, but do not allow local governments to access information that could identify operators outside of the terms of the agreement. Many short-term rental platforms have agreements with local governments. As of March 2019, Airbnb had more than 350 VCAs with state and local governments in the U.S.17 While VCAs allows local governments to receive a steady stream of transient occupancy taxes, officials in several states have expressed concerns that these agreements allow platforms to remit less to governments than they owe, a problem compounded by VCA provisions that hinder tax authorities’ ability to audit platforms.18 See the Appendix for more information on VCAs. Memorandum of Understanding A memorandum of understanding (MOU) typically focuses on issues such as disclosing data, posting property registration numbers and removing illegal listings. Be aware that an MOU can include provisions that limit cities’ enforcement power or create additional duties for cities. For example, in its draft MOU with the City of Denver, Airbnb included provisions that would have made the MOU confidential and require the city to resort to arbitration to resolve disputes. Together, these provisions would have limited transparency and hampered the city’s ability to use the courts for its enforcement actions. Denver rejected the draft.19 MOUs may create additional duties for cities, such as when an MOU requires a platform to take down listings for unregistered properties but places the burden on cities to inform the platform about suspicious properties — a resource-intensive task. Cities may attempt to shift some of these burdens onto the platform. In one settlement with New York City, Airbnb agreed to automatically provide information for certain listings that met specific criteria.20 In the City of Portland, OR’s MOU with Airbnb, the two parties share duties: Airbnb is responsible for regularly reporting data about hosts and properties, and Portland is responsible for using the information it receives to verify that hosts have properly registered.21 KEY CONSIDERATION Approach negotiated agreements well informed and with a clear policy goal in mind. Because VCAs and MOUs tend to be offered with standard language and provisions that benefit platforms and hinder city oversight efforts, cities should be prepared to analyze the agreements and decide whether and how to negotiate more favorable conditions. BULLSEYE-POINTER Voluntary Collection Agreement (VCA): A VCA typically involves a short-term rental platform agreeing to collect and remit transient occupancy taxes on behalf of its hosts. Memorandum of Understanding (MOU): A MOU typically focuses on issues such as disclosing data, posting property registration numbers and removing illegal listings. NATIONAL LEAGUE OF CITIES 31 30 Short-Term Rental Regulations: A Guide for Local Governments ENFORCEMENT The purpose of regulations should not just be to capture additional revenue but to minimize and mitigate the negative side effects associated with the uncontrolled growth of short-term rentals. Cities need to move away from reactive to proactive enforcement when possible. Effective enforcement is key to an ordinance’s success. Without regulations that clearly define what a short-term rental is, a database of units being operated, and contact information for those units, cities are effectively rendered helpless in enforcing their regulations. DEDICATE RESOURCES TO ENFORCEMENT Dedicated resources, time, staff and money are necessary for successful enforcement. Short-term rental regulation enforcement can be revenue neutral or positive for municipalities when license, permit and tax revenue offsets costs.22 In some cases, cities can also leverage existing resources such as 311 service to take in short-term rental complaints. Some examples of key enforcement components that require dedicated resources include: ŠHiring additional code enforcement officers to identify and flag repeat offenders ŠHiring a third-party platform to help with data collection and enforcement ŠHiring a web developer to create a “one-stop-shop” website for STR hosts and residents ŠHiring additional staff to set up and service a complaint hotline ŠInstituting (re)inspections for violating properties CITY SPOTLIGHT: COLUMBUS, OH The most recent ordinance amendment in the City of Columbus allows the licensing department to deny, revoke or suspend a permit if there are three or more emergency calls made on a specific property in the previous 12 months (i.e., “three-call rule”). To help facilitate this system, the city’s technology department created an internal database that connects the 311 service with the city’s computer-aided dispatch software to allow enforcement to search the address on the map and know what type of emergency service was requested. City staff reference this database when an application is made or when a complaint about a property is filed. This allows the city to identify properties that have violated the ordinance or have passed the “three-call rule.” 32 Short-Term Rental Regulations: A Guide for Local Governments ENSURE EXTENSIVE COMMUNICATION AND MARKETING Transparent and clear communication and marketing are critical to the success of an ordinance. Clear communication will support the ordinance’s success (e.g., hosts, guests and residents know what the rules and regulations are) and is key to preventing community backlash when an ordinance is established or revisited. Consistent contact with landlord associations and property owner groups allows the city to convey to hosts how to remain in compliance. This may be an opportunity to develop relationships with trusted voices in key groups who can serve as a liaison with the broader community and as a spokesperson for good hosting etiquette. Regular contact with residents means that cities can convey the best way to file nuisance and safety complaints should there be a violation at a short-term rental. This helps communities feel like they have a trusted partner in the city to ensure community safety. KEY CONSIDERATION Consider hiring or assigning specific city staff to be liaisons with the community. Doing so may help establish trust among hosts, residents and the city, making room for more constructive conversations should something go awry. In addition, developing relationships with specific community members (e.g., hosts or residents) can help broaden the city’s reach into the community. For example, hosts who have good relationships with the city can promote good hosting etiquette in the community. BULLSEYE-POINTER MOVE REGISTRATION AND ADMINISTRATION SYSTEMS ONLINE To the extent possible, cities should limit the administrative burden on city staff and platform users. Moving registration or licensing systems online (while keeping the paper application option open) makes the process more seamless for hosts and less cumbersome for city staff who process those applications. Beyond moving the registration or licensing system online, consider launching a centralized, accessible and easy-to-use webpage with all relevant short- term rental information. One common complaint that cities receive is that short-term rental regulations are difficult to understand. In most cases, it is not that the regulations themselves are too complex, but that regulations are not transparent and explained in an accessible way. Launching a webpage that is regularly updated keeps the community informed. According to a recent 2022 report and survey from Rent Responsibly and the College of Charleston, 49 percent of surveyed short-term rental hosts got information from government websites about local regulations that affect short-term rentals.23 Furthermore, this webpage can serve as a resource for city staff who are not experts on short-term rentals but may be required to liaise with the public about them. NATIONAL LEAGUE OF CITIES 35 34 Short-Term Rental Regulations: A Guide for Local Governments CITY SPOTLIGHT: HENDERSON, NV The City of Henderson set up an easily navigable webpage with information on short-term rentals, including application materials and answers to frequently asked questions.24 This webpage serves as a “one-stop-shop” for hosts, residents and staff. The short-term rental webpage has the second-highest number of hits on the Henderson website. On the webpage hosts can: ŠFind the most up-to-date short-term rental ordinance and state laws that apply to short-term rentals ŠRegister their short-term rental · Find city contact information to support them through the registration process · Find clear lists on how to apply and what documents are needed · Find application forms that are easy to download or file online ŠRenew their short-term rental registration ŠPay their transient lodging tax and fees · Find tax forms that are easy to download On the webpage residents can: ŠFind relevant short-term rental regulations, including the city ordinance and state laws that apply to short-term rentals ŠLocate the complaint phone hotline to report any illegal short-term rental or to file noise, trash, parking, occupancy or other nuisance complaints ŠAccess the complaint website to submit a complaint online REVISIT AND ADAPT The short-term rental market is consistently in flux, meaning regulations may have to change to meet the market and evolving community needs. Regularly revisit your ordinance to ensure that it still has the right balance of competing expectations and alignment with city goals. ESTABLISH A FEEDBACK LOOP Particularly when first passing an ordinance, be intentional about setting metrics of success that align with policy goals. These qualitative and quantitative policy goal-aligned metrics will determine how performance is evaluated. Setting a dedicated evaluation period following the passage of a short-term rental ordinance will allow for better evaluation and help generate ideas of how to improve an ordinance. Make sure the public and the hosts understand that the regulation may change at the end of the evaluation period. Build in a recurring check-in with relevant stakeholders to determine whether the short-term rental ordinance is meeting the city’s originally stated goal, and if not, what needs to be adjusted. This is where the feedback loop is particularly important. Keep an open line of communication with relevant stakeholders (e.g., landlord associations, property owners, residents, housing advocates, community groups, hotels, tourism agencies, etc.) to better understand how the implementation of the ordinance is playing out. In Fayetteville, AR, the city authorizes a 20-month sunset clause in its ordinance, allowing city leaders to conduct regular review and reauthorization of the ordinance.25 Some adjustments have been made following these regular review periods, including increasing the occupancy tax rate to better fund the cost of enforcement, adjusting the cap on the number of short-term rentals allowed in the community and requiring a unit inspection. KEY CONSIDERATION If there is a recurring evaluation period for the ordinance, tell the community early on. Transparency is key to making sure hosts and residents know that regulations may change in the future. This may limit the potential backlash of changing regulations after passing them. BULLSEYE-POINTER NATIONAL LEAGUE OF CITIES 37 Conclusion SHORT-TERM RENTALS ARE here to stay and, when regulated with care and the proper safeguards in place, can be integrated into the fabric of a community. STRs can enhance tourism, stimulate economic growth in targeted neighborhoods and give residents a way to supplement their income, but can also exacerbate racial inequity, put pressures on affordable housing and disrupt neighborhoods. With proper regulation, cities can enjoy the benefits of STRs and limit their negative impacts. Regulating short-term rentals is not about limiting their potential, but about enacting the appropriate mechanisms to keep competing priorities and interests balanced. As cities consider regulations to address short-term rentals in their communities, it is important that they act promptly, remain focused on a clear policy objective, consider racial equity, actively engage with relevant stakeholders, develop and enforce clear regulations, and provide continuous review of ordinances. The resources found in this Action Guide can help our communities find the proper balance to effectively support and regulate this growing industry. 38 Short-Term Rental Regulations: A Guide for Local Governments NATIONAL LEAGUE OF CITIES 39 Appendix Voluntary Collection Agreements (VCAs) COMMON PROVISIONS THINGS TO WATCH OUT FOR COLLECTION AND REMITTANCE Platforms agree to collect transient occupancy taxes from guests and remit the amount collected to the government taxing authority. Without this provision, the platform may refuse to collect the tax, arguing that hosts are responsible for collection. Even with the provision, some platforms have been accused of under delivering taxes remitted to cities. REPORTING AGGREGATE INFORMATION The platform agrees “reasonably to report aggregate information” related to its collection and remittance of transient occupancy taxes to the tax authority. Aggregate information includes the total amounts of receipts, exemptions, adjustments and so forth, but does not include individualized information for specific properties. Aggregate information does not allow cities to gather individualized information on particular properties. DETERMINING LIABILITY FOR TAXES The platform agrees to be held legally responsible for failure to report, collect or remit the transient occupancy taxes, and the tax authority agrees not to hold individual hosts responsible for reporting, collecting or remitting taxes on their property. WAVIER OF LOOK-BACK The tax authority agrees not to pursue any actions to recover unpaid taxes that had been due before the date the agreement went into effect. If the city has not yet received payments from a large proportion of STRs, then waiving all claims on taxes owed before the VCA’s implementation will result in the city potentially forfeiting a significant amount of tax revenue. On the other hand, a city may not have the capacity to go after back taxes, and be mostly concerned with collection of future taxes, making waiver of past tax liability a lower priority. NOTIFICATION TO HOSTS AND RENTERS The platform agrees to notify hosts and renters that it will be collecting and remitting transient occupancy taxes for their transactions. COMMON PROVISIONS THINGS TO WATCH OUT FOR AUDITING The tax authority agrees to audit the platform on the basis of its tax returns and supporting documentation, rather than on audits of individual renters or hosts. Some VCAs also state that the tax authority cannot audit individual renters or hosts until it has finished auditing the platform and a tax issue remains unresolved. All transaction and tax data reviewed by a city tax authority must be anonymized. If the city suspects wrongdoing on the part of a specific host, it must first audit the anonymous data, then pick out suspicious transactions, and then finally obtain a subpoena to get identifiable data from the platform. The tax authority agrees to limit the number of times it will audit the platform (e.g., to only audit the platform once every two years, and to only audit transactions conducted over a 12-month stretch.) This may limit the tax authority’s access to data and ability to audit individual hosts and affect city efforts to enforce home-sharing laws. Cities such as Culver City, CA, have negotiated alternative provisions ensuring that they can continue to audit individual hosts if they receive information about the property’s violations from another source.26 Anonymized data may mean that cities can only use aggregate information, which prevents cities from investigating individual cases of violation. For example, Snowmass, CO, states that it will audit “on an anonymous numbered account basis,” suggesting that disaggregation is not required.27 Cities can also suggest alternative kinds of privacy protection that allow for individualized reports, such as pseudonymizing information. VCAs typically provide that all information about hosts and guests will remain anonymous unless the city has completed an audit of the platform and served the platform with a subpoena or similar legal process. Cities may want to negotiate changes to this provision to allow them to ensure that properties are registered. For example, if cities have already passed ordinances requiring registration, their audits might request information about the registration number. Cities can negotiate limits on audit frequency to allow for more frequent and tailored enforcement efforts. For instance, the audit frequency in Pacific Grove, CA, is once every 36 months; although this period may still be too long for many cities to effectively audit home- sharing, it does indicate that VCAs’ time provisions can vary.28 40 Short-Term Rental Regulations: A Guide for Local Governments NATIONAL LEAGUE OF CITIES 41 Endnotes 1 The history of short-term rentals (n.d.). Keycafe Blog. https://web.archive.org/ web/20220310191702/https://blog.keycafe.com/the-history-of-short-term-rentals/ 2 Barron, K., Kung, E., & Proserpio, D. (2020, March 4). The effects of home-sharing on house prices and rents: Evidence from Airbnb. Marketing Science, 40(1), 1 – 191. http://dx.doi.org/10.2139/ssrn.3006832 3 Resolution: 172-19 A Resolution to Request That City Staff Study and Develop an Ordinance to Regulate Short-Term Rentals in the City of Fayetteville (2019, July 16). Fayetteville City Code. https://web.archive.org/web/20220310192617/https://www.fayetteville-ar.gov/ DocumentCenter/View/19304/Short-Term-Rentals-Study-SIGNED-RES-172-19 4 U.S. Census Bureau. (n.d.). Quarterly homeownership rates by race and ethnicity of householder for the United States: 1994-2020. https://www.census.gov/housing/hvs/data/charts/fig08.pdf 5 Edelman, B., Luca, M., & Svirsky D. (2017). Racial discrimination in the sharing economy: Evidence from a field experiment. American Economic Journal: Applied Economics, 9(2), 1–22. https://doi.org/10.1257/app.20160213 6 Airbnb. (2019, September 2019). An update on Airbnb’s work to fight discrimination. https://news.airbnb.com/an-update-on-airbnbs-work-to-fight-discrimination/ 7 Chapter 598 Hotel/Motel and Short-Term Rental Operations (2018, January 30). Columbus City Codes. https://library.municode.com/oh/columbus/codes/ code_of_ordinances?nodeId=TIT5BURELICO_CH598HOMOSHRMREOP 8 Chapter 15 - Short-Term Rental Tax: Legislative Intent (2015, September 1). City of Boulder, Colorado Charter and Revised Code. https://library.municode.com/co/boulder/ codes/municipal_code?nodeId=TIT3RETA_CH15SHRMRETA_3-15-6--3-15-12RE 9 Binzer, U. (n.d.). A practical guide to effectively regulating short-term rentals on the local government level. Host Compliance. https://web.archive.org/web/20220317135940/https:// www.cityofsantacruz.com/home/showpublisheddocument/57754/636177355568470000 10 Binzer, U. (n.d.). Home-sharing & short-term rentals regulations FAQs. Granicus. https://granicus.com/pdfs/Home-Sharing-Short-Term-Rentals-FAQ.pdf 11 San Francisco’s registration process: Frequently asked questions. (n.d.). Airbnb. https://www. airbnb.com/help/article/1849/san-franciscos-registration-process-frequently-asked-questions 12 Nashville, Tennessee: How the codes department achieves 90%+ compliance with Host Compliance. (n.d.). Granicus. https://granicus.com/how-the-codes- department-achieves-90-compliance-with-host-compliance/ 13 A Local Law “Amending the Village of Lake Placid/Town of North Elba Land Use Code to Add Regulations Pertaining to Short-Term Rentals (2020). Village of Lake Placid/Town of North Elba Land Use Code. http://www.northelba.org/files/TownLocalLawSubmissiontoNYSDOS.pdf 14 Brown, A. (2021, July 1). SC cities sue Airbnb and other short-term rental companies for not paying local taxes. The Post and Courier. https://www.postandcourier.com/ business/real_estate/sc-cities-sue-airbnb-and-other-short-term-rental-companies-for- not-paying-local-taxes/article_f44f0f60-9bb9-11eb-a4b5-636eb8976c0f.html 15 Amendment of Municipal Code Section 3-24-030 Regarding Surcharge Associated with Vacation Rentals and Shared Housing Units (2018, June 27). Municipal Code of Chicago. https://www.civicfed.org/sites/default/files/o2018-4988.pdf 16 Reuters, T. (2016, November 3). Chicago passes short-term rental ordinance. Hospitality Lawyer. https://hospitalitylawyer.com/chicago-passes-short-term-rental-ordinance/ 17 Martineau, P. (2019, March 20). Inside Airbnb’s ‘guerrilla war’ against local governments. Wired. https://www.wired.com/story/inside-airbnbs-guerrilla-war-against-local-governments/ 18 Bucks, R. D. (2017, March). Airbnb agreements with state and local tax agencies. A formula for undermining tax fairness, transparency and the rule of law. https:// www.ahla.com/sites/default/files/Airbnb_Tax_Agreement_Report_0.pdf 19 Swanson, C. (2020, February 14). Frustrated Denver officials reject deal with Airbnb. The Denver Post. https://www.denverpost.com/2020/02/14/denver-airbnb-agreement 20 Martineau, P. (2019, May 24). Airbnb and New York City reach a truce on home-sharing data. Wired. https://www.wired.com/story/airbnb-new-york-city-reach-truce-on-home-sharing-data/ 21 Templeton, A. (2019, September 4). Portland reaches rental data sharing agreement with Airbnb. Oregon Public Broadcasting. https://www.opb.org/ news/article/portland-airbnb-reaches-rental-data-sharing-agreement/ 22 Binzer, U. (n.d.). Home-sharing & short-term rentals regulations FAQs. Granicus. https://granicus.com/pdfs/Home-Sharing-Short-Term-Rentals-FAQ.pdf 23 Rent Responsibly & College of Charleston. (2022, January). 2022 report state of the short-term rental community. https://www.rentresponsibly.org/wp-content/ uploads/2022/01/2022-State-of-the-STR-Community-Report-January-2022.pdf 24 City of Henderson, NV. (n.d.). Short-term vacation rentals. https://www.cityofhenderson.com/ government/departments/community-development-and-services/short-term-vacation-rentals 25 Short-Term Regulations (2021, April 20). Fayetteville City Code. https://www.fayetteville- ar.gov/DocumentCenter/View/23281/Ordinance-6427-Short-Term-Rental 26 Voluntary Collection Agreement for City of Culver City, California, Transient Occupancy Tax (2018, September 25). https://www.culvercity.org/files/assets/public/documents/ city-manager/short-term-rentals/vca-agreement-with-airbnb_1.pdf 27 Voluntary Collection Agreement for Town of Snowmass Village Sales and Lodging Taxes (2016, November 30) http://nwccog.org/wp-content/ uploads/2018/07/AIRBNB-Voluntary-Collection-Agreement.pdf 28 Mayberry, C. (2017, October 19). Pacific Grove’s new short-term rental policy includes agreement with Airbnb. Monterey Herald. https://www.montereyherald.com/2017/10/19/ pacific-groves-new-short-term-rental-policy-includes-agreement-with-airbnb/